{"id":324152,"date":"2023-07-20T11:19:16","date_gmt":"2023-07-20T03:19:16","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=324152"},"modified":"2023-07-20T11:19:19","modified_gmt":"2023-07-20T03:19:19","slug":"stock-in-focus-cebu-pacific-cebu-air-inc-ceb-20-july-2023-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-cebu-pacific-cebu-air-inc-ceb-20-july-2023-by-ap-securities\/","title":{"rendered":"Stock in Focus: Cebu Pacific \/ Cebu Air Inc. (CEB) – 20 July 2023 by AP Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>CEB<\/td><\/tr>
Company Name<\/strong><\/td>Cebu Air Inc.<\/td><\/tr>
Broker<\/strong><\/td>AP Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>20 July 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 53.00<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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We have a BUY rating on CEB with Target Price of P53.00 per share.<\/p>\n\n\n\n

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Analysis and Opinion<\/h2>\n\n\n\n

Fuel surcharge maintained at Level 4<\/strong><\/p>\n\n\n\n

The Civil Aeronautics Board (CAB) maintained fuel surcharge for domestic and international flights at Level 4 for the month of August as fuel prices remain within manageable levels. Jet fuel prices in Asia & Oceania averaged $97.27 for the week ending July 14, according to data from the International Air Transport Association (IATA). While this is 5.8% higher than the previous week and 7.8% above the previous month, it is still 23.1% lower than the average prices last year. Level 4 fuel surcharge means that depending on the distance, surcharge rates will range from PHP117 to PHP342 for domestic flights and PHP385.70 to PHP2,867.82 for international flights. Airline operators welcomed CAB\u2019s decision to maintain fuel surcharge at current levels, saying that lower airfares will help boost demand for flights.<\/p>\n\n\n\n

AirAsia Philippines surpass pre-pandemic load factor<\/strong><\/p>\n\n\n\n

AirAsia Philippines, the country\u2019s second budget airline, reported that its load factor for the first half of 2023 reached 92%, surpassing its pre-pandemic level of 91%. While data for listed budget carrier Cebu Air, Inc. (CEB) is not yet available, we can assume that it would report the same improvement on the back of the resurgence in tourism. However, we expect CEB\u2019s load factor to be lower than AirAsia Philippines for two reasons: (1) CEB\u2019s load factor in 2019 was only at 86.0% and its pre-pandemic load factor only averaged around 83.6%, and (2) there could have been some shift in demand between the two budget airlines due to CEB\u2019s widely-publicized shortcomings in servicing its customers during the peak summer travel season.<\/p>\n\n\n\n

CEB\u2019s happy problems likely to continue<\/strong><\/p>\n\n\n\n

To recall, CEB got into hot water recently due to delayed and cancelled flights, which the airline blamed on not having enough operating aircraft to serve the surge in demand. However, despite its recent problems, a Vox Populi Polls survey showed that 84% of respondents said that they will still choose to fly again on Cebu Pacific due to its low fares. The same survey also showed that Cebu Pacific\u2019s brand awareness level of 47% surpassed even flag carrier Philippine Airlines, which had a 43% awareness rating. CEB\u2019s rival budget airline, AirAsia Philippines, had a brand awareness level of 9%. It seems that the old adage that \u201cbad publicity is still publicity\u201d holds true, and we can continue to expect packed aircraft and delayed flights from Cebu Pacific in the near future, which will help CEB (its listed parent) reach the consensus net income forecast of P3.5-Billion for 2023.<\/p>\n\n\n\n

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Check how many brokers recommend this stock<\/h2>\n\n\n\n
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All Stock Rankings<\/a><\/blockquote>