We are maintaining our Hold on China Eastern Airlines Corporation Limited (CEA), but reducing our target price to $18. In its 2008 first half report, China Eastern posted an improvement in its net loss, which fell to RMB212 million from RMB306 million in the prior-year period.
This primarily reflected a large jump (up 161% year over year) in foreign exchange gains to RMB1.9 billion from RMB0.7 billion a year ago due to the Chinese currency's appreciation over the US$. The company continues to record operating losses due to high fuel prices and lower operating efficiencies.
Despite this, China Eastern is well positioned to leverage the growth potential of aviation industry in China. We think the stock price fairly reflects most factors. The company pays no dividend.
Read the full analyst report on CEA.
Get real-time market insights and profitable stock recommendations from the team of analysts at Zacks Equity Research. See all todays Analyst Blog entries on Zacks.com.