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Cathay Pacific Airways Limited (CPCAY)

Undervalued
IndustrialsAirlinesHong Kong

Fundamental

84

Price

$14.74

Market Cap

$87.20B

Part 1 · What the company is worth

Overview

Cathay Pacific is Hong Kong's home airline, flying passengers and freight between Hong Kong and destinations across Asia, North America, Europe and Australia, using the city's international airport as its hub. The group also owns the low-cost carrier HK Express and a large cargo operation that flies dedicated freighter aircraft. Its business depends on Hong Kong remaining an attractive stopover point for travellers and shippers moving between Asia and the rest of the world.

How it makes money

The airline sells seats and cargo space on scheduled flights; revenue is booked when a passenger flies or a shipment moves, and results move with two separate drivers — how full the planes are (load factor) and how much each seat or kilogram of cargo fetches (yield). Fuel is the single largest cost, so profitability is squeezed whenever oil prices rise faster than fares and freight rates can be adjusted.

Revenue by segment

Passenger and Other79.2%

Passenger flights on Cathay Pacific and HK Express, plus catering, engineering and other airline-related services; not broken out separately in reported results.

Cargo20.8%

Dedicated freighter and belly-hold cargo capacity, which carried 1.67 million tonnes in 2025 for HK$24.3 billion in revenue.

Competitive moat

Scale · Narrow

Cathay's position as the dominant carrier at Hong Kong International Airport, with decades of accumulated route rights, slots and a large widebody fleet, gives it a real hub advantage that a new entrant could not quickly replicate. The advantage is narrow: airlines compete hard on price for the same passengers, and Cathay's own results show yields falling under regional competition even as the hub advantage holds.

What drives demand

Cyclical

Air travel and air freight demand rise and fall with global trade and travel activity, and fares fall quickly whenever regional airlines add capacity, as happened across Asia in 2025 as carriers restored seats after the pandemic. Jet fuel, priced off volatile crude oil, is a further swing factor the airline can only partly hedge.

Key risks

  • Geopolitical route disruption — A volatile geopolitical environment can force sudden route cancellations and reroutings, as happened when the group cancelled all flights to Dubai and Riyadh in response to Middle East tensions, cutting capacity with little notice.
  • Fuel price volatility — Jet fuel is one of the largest items on the airline's cost base; management has hedged only around 30% of anticipated 2026 fuel needs at roughly $70 a barrel for Brent crude, leaving most of the exposure unhedged.
  • Regional competition on fares — Asian airlines restoring post-pandemic capacity pushed fares down across the region in 2025, cutting Cathay Pacific's full-service yield by 12% and low-cost subsidiary HK Express's yield by 23% year on year.

The case for

Buyers argue that Cathay's Hong Kong hub advantage remains intact, that group profit rose to HK$10.8 billion in 2025 on record passenger volumes, and that continued long-haul network expansion to North America and Europe positions the airline to keep capturing recovering travel demand.

The case against

Sellers worry that regional overcapacity is already pushing fares and yields down, that geopolitical shocks can force route cancellations with almost no warning, and that with most of its fuel exposure unhedged a sustained rise in oil prices would hit margins hard just as competitive pressure caps how much fares can rise.

Written by the editors, published on August 18, 2026

Direct competitors

Who this company fights with for the same customers

Generated on September 18, 2026 with claude-haiku-4-5 — shared with all users

Singapore Airlines LimitedC6L

The other premium Asian hub carrier, competing directly for long-haul premium and connecting traffic between Southeast Asia, Europe, Australia and North America.

EmiratesNot tracked

Dubai's hub carrier competes for the same Asia-to-Europe, Africa and Middle East connecting passengers that Cathay routes through Hong Kong.

China Southern Airlines Company Limited (中国南方航空)Not tracked

The largest mainland Chinese carrier competes on price and capacity for Chinese outbound travellers on regional and long-haul routes Cathay feeds through Hong Kong.

Korean Air Lines Co., Ltd. (대한항공)003490

Seoul Incheon is a rival Northeast Asian transfer hub disputing the same transpacific and Asia-Europe connecting flows.

Qatar AirwaysNot tracked

State-owned Gulf carrier that draws Asian passengers onto its Doha hub for Europe, Africa and the Americas, the same one-stop itineraries Cathay sells.

Hong Kong Airlines Limited (香港航空)Not tracked

Privately held rival operating from the same home airport, competing head-on with Cathay on Asia-Pacific regional routes where yields have been falling.

Balance Sheet & Liquidity

Revenue

$126.50B

Trailing 12 months to the last reported quarter — estimated from per-share metrics

Net Income

$12.54B

Trailing 12 months to the last reported quarter — estimated from per-share metrics

Free Cash Flow

$15.46B

Total Equity

$58.02B

Total Liabilities

$63.49B

Current Ratio

0.44

Interest Coverage

-

Debt/EBITDA

2.79

Earnings Per Share

Revenue & Net Income

Free Cash Flow

Income Breakdown

Historical statement

Margins over time

Debt over time

How heavy the debt is

Growth grid

Growth — Revenue

Fair Value Estimation

CyclicalUndervalued

Fair Value

$19.76

Current Price

$14.74

Margin of Safety

+25.4%

Fair Value Range

$15.37 - $24.16

Spread across the valuation methods used, not a statistically calibrated confidence interval.

Estimation Methods

Analyst price target:$16.09
Discounted cash flow (DCF):Not applicable to this type of company
Earnings multiple (P/E):$16.92
Graham growth formula:Not applicable to this type of company
Earnings power value (EPV):$25.31
Justified P/B:Not applicable to this type of company
Dividend discount (Gordon):Not applicable to this type of company
P/FFO, funds from operations:Not applicable to this type of company
Mid-cycle earnings:Not enough data to compute it
Revenue multiple:Not applicable to this type of company
Analyst Consensus:Buy (12B / 4H / 0S)
Last Earnings Surprise:-22.94%

Valuation Metrics

P/E Ratio

7.15

ROE

24.5%

P/B Ratio

1.54

P/FCF

5.64

Gross Margin

65.2%

ROIC

8.2%

Profitability Radar

Value Creation (Economic Moat)

ROIC

8.2%

WACC

4.6%

ROIC − WACC

+3.6 pp

ROIC exceeds the cost of capital — the company is creating value for shareholders.

Fundamental Analysis Criteria

Passed (16)

  • ROIC 8.2%
  • Gross Margin 65.2%
  • P/FCF 5.64
  • P/B Ratio 1.54
  • Debt/Equity ratio
  • Operating Margin 12.3%
  • Positive Free Cash Flow
  • Debt/EBITDA
  • Price below Graham Number
  • DCF valuation (Undervalued)
  • ROE 22.7%
  • Revenue Growth 5Y 20.0%
  • Analyst Consensus 75% Buy
  • Earnings Surprise avg 50.5%
  • Earnings Quality (OCF/NI) 2.58
  • Net Margin Trend 9.3% vs 9.2%

Failed (4)

  • Price CAGR 4.57%
  • CapEx intensity
  • Current Ratio
  • Piotroski F-Score 2/9

Unavailable (7)

  • EPS data insufficient
  • Dividend Payout NaN%
  • Interest Coverage
  • Return on Tangible Assets
  • Low reliance on intangibles
  • PEG Ratio (need PE > 0 and growth > 0)
  • Share Dilution (missing shares data)

Piotroski F-Score

2/9

Serious financial concerns

score
criteria

Earnings Quality

2.58

High quality: earnings backed by cash

Share Dilution

-

Buying back shares. Shareholder friendly

Institutional Holdings

No institutional filings reported for this company.

Governance

Executive Team

NameTitleAge
Mr. Guy Martin Coutts Bradley J.P.Executive Chairman of the Board59
Mr. Siu Por LamCEO & Executive Director52
Ms. Rebecca Jane SharpeCFO & Executive Director54
Mr. James John McGowanChief Operations & Service Delivery Officer and Executive Director52
Ms. Hoi Zee LauChief Customer & Commercial Officer and Executive Director54
Mr. Keith FungGeneral Manager of Corporate Finance-
Ms. Joanna LaiGroup General Counsel & Company Secretary40
Ms. Patricia HwangDirector of People-
Christopher J. BuckleyHead of Financial Service-
Mr. Jonathan NgRegional Head of Customer Travel & Lifestyle - Southeast Asia-

Audit Risk

3

Board Risk

4

Compensation Risk

5

Shareholder Rights Risk

8

Part 2 · The price and when to enter

This part won't tell you whether the company is worth owning: it helps you choose when to buy it, once the fundamentals have convinced you. Inside: technical analysis, potential, historical drawdowns, gamma exposure.

Latest News

Recent headlines for CPCAY, sourced from Markets Gazette.

No recent news for CPCAY.