{"id":327984,"date":"2024-05-17T12:01:38","date_gmt":"2024-05-17T04:01:38","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=327984"},"modified":"2024-07-28T23:55:37","modified_gmt":"2024-07-28T15:55:37","slug":"stock-in-focus-cebu-pacific-cebu-air-inc-ceb-17-may-2024-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-cebu-pacific-cebu-air-inc-ceb-17-may-2024-by-ap-securities\/","title":{"rendered":"Stock in Focus: Cebu Pacific \/ Cebu Air Inc. (CEB) – 17 May 2024 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 May 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 53.13<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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We remain a BUY on CEB as we expect travel demand to remain strong for the remainder of the year, despite the transfer of some Q2 demand to Q1. While CEB is not quite one of our top overall picks, it remains the best option to get exposure to the tourism and travel segment. As such, we expect the market to eventually price this in and push the price of CEB closer to consensus Target Price of P53.13.<\/p>\n\n\n\n

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

Passenger revenues boost earnings<\/h3>\n\n\n\n

CEB benefitted from Holy Week holidays landing within Q1, giving a boost to travel demand to a relatively lean quarter. The airline flew 5.5-Million pax during the quarter, up 14% year-on-year (YoY), which when coupled with a 9% jump in average fare resulted to a 24% jump in passenger revenues to P17.8-Billion. Contribution of passenger revenues to the total increased to 70.4% from 68.4% in the same period last year. Cargo and ancillary revenues both rose by double-digits as well (11% and 14% respectively).<\/p>\n\n\n\n

Fuel costs higher on more flights<\/h3>\n\n\n\n

Average jet fuel prices for the quarter was down 4% from the same period last year, but fuel costs rose 13% in line with the 14% increase in the number of flights. Despite higher fleet-related, crew, and airport costs, operating income surged 114% to P2.6-Billion from last year\u2019s relatively low base. Net income ended 108% higher at P2.2-Billion, and even after stripping out non-core items from insurance claims, forex gains, and market valuation, core net income still grew by a very robust 54% YoY. <\/p>\n\n\n\n

Financials getting healthier<\/h3>\n\n\n\n

CEB\u2019s debt ratios showed continued improvement from the previous quarter, with net debt-to-EBITDA improving from 4.6x in 4Q23 to 4.4x in 1Q24. Net debt-to-equity also showed remarkable improvement from 25.2x to 18.7x. While these ratios are far from ideal, it only goes to show how far CEB has come from the troughs of the pandemic.<\/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>