Both commercially and, according to several industry rankings and customer surveys, in terms of its product, Cathay Pacific is up there with the top carriers in international air travel. Only Singapore Airlines, the region's other leading carrier, matches Cathay's remarkable margins and earnings strength. Its debt-to-equity ratio, too, is among the lowest of the big global airlines.
With its Hongkong base, the legacy carrier boasts a prime position in one the leading growth markets in air transport, both of passengers and cargo: Southeast Asia is full of fast-growing, developing economies with huge potential, particularly for airlines when it comes to provide connectivity for the region's island-heavy geography.
Even under the lowering clouds of a global trade war, Cathay would thus still stand to profit from the ever-expanding regional reach of its home country China. Especially in the face of an antagonistic US administratin, the Middle Kingdom is determined to grow its own, Yuan-based economic sphere of influence throughout East Asia, regardless of what Western countries might do vis-à-vis its overseas trade. This alone guarantees a backstop for Cathay.
Yet by the same token, the carrier is unusually dependent on its cargo business: A full quarter of its revenues is brought up by that segment, making Cathay particularly sensitive to developments in the business cycles of its core markets.
Taken together, this is why after its recent run, any future upside for the share price is down to valuation aspects: Everything else is pretty muched priced in already. It is only when investors will be ready to award the carrier stable or possibly even higher multiples in the near to mid-term that the share might be able to fly any higher. If, however, multiples should compress from here, the shares will go down no matter how well Cathay will manage to hold up its business in the eye of the hurricane.
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