Jinwu Financial News | According to a UBS research report, the recent rise in China's aviation industry stock prices was mainly driven by improved investor sentiment. Domestic investors, in particular, were significantly boosted by the year-on-year decline in domestic air ticket prices and the favorable outlook for aviation fuel prices in 2025. Furthermore, the news that Canada lifted restrictions on the number of direct flights to China and that China Southern Airlines plans to sell 10 B787-8 aircraft has further boosted market confidence. The bank believes that in the next 2-3 years, if fleet size growth slows down, airlines may show maximum flexibility when macroeconomic conditions rebound.
The bank is cautiously optimistic about the future of China's aviation industry. Data shows that since November, A-share and H-share China Airlines stock prices have risen 6% and 16% respectively, surpassing the performance of CSI 300 and HSI. This strong stock price is mainly due to increased investor sentiment, particularly the improvement in the year-on-year decline in domestic ticket prices. UBS believes that although the market is now trading more on marginal changes rather than fundamental inflection points, it is expected that the year-on-year improvement in domestic ticket prices may continue until 2025 as the peak of Chinese New Year travel comes earlier. However, as the 1Q25 comparison base normalized and demand prospects became uncertain, the bank saw downside risks.
The bank's preferred stock is Spring Airlines (601021.SH), which is expected to have a solid net profit and ROE outlook for 2025-26, driven by the expansion of flight volume in Japan and South Korea.
