Airline stocks jumped in Hong Kong on Thursday morning, with investor sentiment boosted by upbeat January operational data from several major air carriers. Air China Ltd.
gained as much as 5.7%, China Eastern Airlines Corp.
advanced 3.8%, while China Southern Airlines Co.
rose 2.4%. Hong Kong’s flagship carrier Cathay Pacific Airways Ltd.
The rally came after the four airline majors released sharply higher passenger data for the past month. All three Chinese carriers said their passenger flight traffic, measured by revenue passenger kilometers, grew over 40% in January, with Air China leading the pack with a 62% jump. The airlines’ passenger load factors, which indicate the percentages of available seats that are filled by passengers, increased around 10 percentage points. Cathay posted even stronger data, with its monthly passenger number surging multifold to over 1 million, a record high for the company since the pandemic first broke out in 2020. The airline’s passenger load factor also jumped 46.4 percentage points on year. Analysts reckon Cathay Pacific’s outperformance over its mainland-China peers may be sustained in the coming months. “Although the Chinese airlines will benefit from currency, oil and passenger traffic tailwinds this year, we believe this is already reflected in valuations,” Jefferies analysts said in a note. They point to the currently near-peak price-to-book ratios for the companies. The bank keeps an underperform rating on all three Chinese airline stocks. In contrast, “we prefer Cathay Pacific on passenger capacity expansion and cheaper valuation,” the bank’s analysts said, as they keep their buy call on the Hong Kong airline’s stock.