DJ MARKET TALK: Guoco Capital Upgrades Air China To Hold Vs Sell
1207 [Dow Jones] STOCK CALL: Guoco Capital upgrades Air China (0753.HK) to Hold from Sell on view valuations attractive; sets target at HK$2.00 based on 0.7X book value.
Notes December returnable passenger kilometers (RPK) +1.3% on-year for domestic routes, but RPK for international routes down 4.6%. "We believe the traffic decline for international routes will continue in the first quarter of 2009 as the U.S., Europe and Japan all entered into recession," says Guoco Capital.
Tips Air China to record loss/share at 28 fen for 2008, mainly due to huge hedging losses and 37% rise in fuel cost; tips 2009 EPS at 1 fen. Stock +1.1% at HK$1.83.