花旗：中国国航一季度业绩预期增长强劲 04.17

17 April 2007 | 7 pages

Air China (0753.HK) Buy: Expect Strong 1Q07 Results and Share Performance

 Bright 1Q in a strong year — Air China's 18% passenger traffic growth and 3ppt
lift in passenger load factors in 1Q07 are ahead of our full-year estimates. We
expect a strong upswing in passenger yields and bright 1Q07 results, which are
due on Apr 28 at Shanghai Exchange. Re-iterate our Buy/Low Risk rating and
HK$8.00 target price, which is based on 7.3x 08E EV/EBITDAR.
 Robust passenger traffic and load factors in 1Q07— Air China reported 18%
passenger traffic growth for the first three months in 2007, with passenger load
factors adding 2.9ppts to 74.7%. March passenger load factors were 77.7%.
The biggest driver for this quality growth was the international segment: 36%
traffic growth and 7.9ppt lift in passenger load factors to 77.6% in March.
 Expecting a strong passenger yield upswing as per guidance — In a recent
roadshow, management was upbeat on the 6% yoy jump in passenger yields in
the first two months. We think this is achievable considering the consolidation in
international network and distribution, synergy with Cathay, a better pricing
environment in the domestic market, and the help of surcharges.