Oct. 22, 2009 (Xinhua News Agency) -- Merrill Lynch reiterates 'buy' rating for three Chinese airline giants
BEIJING, Oct.22 (Xinhua) -- Merrill Lynch has reiterated its 'buy' rating for China's three airlines giants, holding that China's domestic aviation industry will keep recovering.
The broker predicted that the total profit of the three airline companies, namely China Southern Airlines (NYSE:ZNH) (ZNH.NYSE; 01055.HK; 600029.SH), Air China (00753.HK; 601111.SH) and China Eastern Airlines (CEA.NYSE; 00670.HK; 600115.SH), will total 1.5 billion yuan in the third quarter.
It targets the H-share price of China Southern, Air China and China Eastern at 5.6 Hong Kong dollars, 3.2 Hong Kong dollars and 2.95 Hong Kong dollars, respectively.
Merrill Lynch noted that the air ticket price in domestic China has seen a rise of 21 percent this year, which is expected to climb further in the future. Meanwhile, the recovery of the international market will further support the profit growth of the Chinese airlines.
Besides, Chinese airlines are expected to be further supported by the appreciation of RMB in 2010.
Of the three airlines, Merrill Lynch recommended China Eastern as the first choice for stock investors, as it will benefit more from the RMB appreciation and its valuation is relatively low currently.
Besides, as the domestic market accounts for 83 percent of China Eastern's passenger transportation businesses, it will largely benefit from the price hike and profit improvement in China's domestic aviation market.
