Cathay Pacific Earnings: High Yields and Resumption of Common Dividends Beat Expectations

Cathay Pacific’s 2023 earnings surprised positively as both passenger and cargo yields were more resilient than anticipated in the second half. Cathay has pushed back its capacity recovery, and we think the slower pace should support yields in 2024. After lifting our yield assumptions, we raise our 2024 net income forecast to HKD 5.6 billion from HKD 3.9 billion. Our net income estimates are largely unchanged for 2025 and beyond. As a result, we marginally raise our fair value estimate to HKD 10 from HKD 9.70. The shares closed 8% below our revised fair value estimate on March 13, but we prefer a higher margin of safety before buying.