CEB: Rising Traffic And Capacity Recovery Will Drive Stronger Prospects

Narrative Update on Cebu Air Analyst Price Target

Analysts have raised their fair value estimate for Cebu Air from PHP 55 to PHP 57, citing slightly stronger expected revenue growth that more than offsets a modest uptick in the discount rate and a marginally softer projected profit margin and valuation multiple.

What's in the News

• October 2025 traffic update shows stable demand, with 2.081 million passengers carried, nearly flat year on year, while RPK grew to 2,234 million as ASK expanded to 2,932 million. This indicates network growth despite a slightly lower load factor at 79.3 percent (company operating results).
• Year to date through October 2025, Cebu Air carried 22.032 million passengers, up from 19.612 million a year earlier, with ASK rising to 29,062 million and RPK to 23,507 million. This underscores continued capacity restoration and demand recovery (company operating results).
• September 2025 data point to moderate traffic growth, with passengers up to 1.826 million and seats offered up 4.4 percent year on year, while seat load factor softened to 81.1 percent as capacity outpaced demand (company operating results).
• Through September 2025, cumulative passengers reached 19.951 million versus 17.510 million a year ago, with broadly stable load factors around 85 percent. This highlights Cebu Air's ability to absorb higher capacity without materially diluting utilization (company operating results).
• August 2025 figures show resilient peak season performance, with 2.103 million passengers and an improved seat load factor of 83.7 percent despite slightly fewer seats offered, while both RPK and ASK increased year on year. This reflects a shift to longer routes or higher average stage length (company operating results).

Valuation Changes

• The Fair Value Estimate has risen slightly from ₱55 to ₱57, reflecting a modestly higher intrinsic valuation for Cebu Air.
• The Discount Rate has increased marginally from 19.66 percent to 19.83 percent, implying a slightly higher required return and risk premium.
• The Revenue Growth assumption has improved modestly from 9.71 percent to 10.30 percent, indicating a slightly more optimistic outlook on top line expansion.
• The Net Profit Margin forecast has edged down slightly from 5.48 percent to 5.39 percent, pointing to a marginally weaker profitability profile.
• The future P/E multiple has increased moderately from 6.52x to 6.67x, suggesting a small uplift in the valuation assigned to forward earnings.