{"id":324502,"date":"2023-08-17T00:58:47","date_gmt":"2023-08-16T16:58:47","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=324502"},"modified":"2023-08-17T00:58:49","modified_gmt":"2023-08-16T16:58:49","slug":"stock-in-focus-cebu-pacific-cebu-air-inc-ceb-17-aug-2023-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-cebu-pacific-cebu-air-inc-ceb-17-aug-2023-by-ap-securities\/","title":{"rendered":"Stock in Focus: Cebu Pacific \/ Cebu Air Inc. (CEB) – 17 Aug 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>17 Aug 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 52.00<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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With CEB already beating the full-year earnings estimates, the company is already cleared for take-off and we are reinstating our BUY rating on CEB based on consensus Target Price of P52.00 per share.<\/p>\n\n\n\n

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

CEB earnings exceed expectations despite operational issues<\/strong><\/p>\n\n\n\n

Cebu Air, Inc. (CEB) reported earnings of P2.7-Billion for 2Q 2023, with the first half earnings already surpassing the consensus estimate of P3.3-Billion for the full year. Passenger volumes have now reached 92% of pre-pandemic level, while the number of flights is at more than 99%. However, average fares are 3% lower than the same period in 2019 despite higher costs of fuel, general costs, and repairs and maintenance, resulting in operating income of P2.5-Billion, which is a little more than half of the operating income booked in 2Q 2019.<\/p>\n\n\n\n

The demand is there, but fuel costs remain an issue<\/strong><\/p>\n\n\n\n

CEB has managed to ride the \u201crevenge travel\u201d wave, with its topline numbers and passenger figures coming within range of pre-pandemic numbers. However, external headwinds such as higher fuel prices and supplier issues temper the company\u2019s bottomline. Fuel prices in the first half averaged $99.30 per barrel, as compared to $78.00 per barrel in 2019. This is further compounded by the weak peso, with the average exchange rate in 1H 2023 at P55.30 to the dollar compared to P52.20 in 2019. As for the supplier issues, aside from the elevated repairs and maintenance costs, CEB\u2019s fleet is virtually cut in half due to planes undergoing premature maintenance and increased standby times for aircraft.<\/p>\n\n\n\n

Expecting a dip in Q3 before another burst in Q4<\/strong><\/p>\n\n\n\n

With the travel industry entering the leaner rainy season in Q3, we expect some weakness in CEB\u2019s revenues this coming quarter. However, this should recover strongly during the holiday travel season in the latter part of the year.<\/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>