The analyst was upbeat on Air China, saying it would outperform China Eastern and China Southern despite forecasting a 21 per cent fall in its bottom-line to RMB1, 906 million.
Air China will buy from Cathay Pacific's parent, Swire Pacific and CITIC Pacific a 10.2 per cent stake for HKD$5.39 billion. This follows Cathay doubling its shareholding in Air China to 20 per cent.
Tai Fook also pointed out Air China's net debt had recently jumped 27 per cent year-on-year to RMB30.7 billion at the end of fiscal 2005 following a gearing ratio of 153 per cent which it described as the lowest among the three mainland carriers.
Tai Fook has upgraded its target price on Air China to HKD$3.45 from HKD$3.20 given the recent stronger relationship with Cathay.
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