Analyst Jason Sum of DBS maintained a Hold rating on Air China (AIRC – Research Report), reducing the price target to HK$4.20.
Jason Sum’s rating is based on several factors impacting Air China’s financial outlook. Despite expectations for strong earnings, the airline faces ongoing pricing pressures that have led to a decrease in passenger yields. This, coupled with macroeconomic uncertainties and weak consumer sentiment, suggests that Air China may not achieve the same level of profitability as other airlines post-reopening.
Additionally, the airline is confronted with several challenges, including the potential reopening of Russian airspace, a shift towards outbound travel among Chinese tourists, and increasing competition from the expanding high-speed rail network. These factors, along with elevated valuations, limit the potential for significant share price appreciation, which supports the Hold rating. The revised target price reflects these concerns, maintaining a cautious outlook on Air China’s stock performance.
Sum covers the Industrials sector, focusing on stocks such as ST Engineering, COSCO SHIPPING Holdings Co, and GE Aerospace. According to TipRanks, Sum has an average return of 1.7% and a 43.75% success rate on recommended stocks.