Air China (SEHK:753) Valuation Check After DBS Downgrade And Delayed Earnings Recovery Forecast

Simply Wall St.

Apr 11

DBS has turned more cautious on Air China (SEHK:753), citing a projected severe loss for FY26 and a delayed earnings recovery to 2027, as fuel costs pressure profitability despite recent ticket price ...

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However, the 30 day and year to date share price returns of 11.61% and 30.38% declines suggest momentum has been fading, despite a 1 year total...","collect":0,"end_time":0,"defaultTopTitle":"simplywall.st","property":["rate","earning"],"viewcount":null,"language":"en","relate_stocks":{"DBS":"Invesco DB Silver Fund","RJAW.SI":"DBS MB ePW240902"},"translate_title":"星展银行下调评级并推迟盈利复苏预测后，国航(SEHK：753)的估值检查","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"DBS":1.5,"RJAW.SI":1.5},"content_text":"DBS has turned more cautious on Air China (SEHK:753), citing a projected severe loss for FY26 and a delayed earnings recovery to 2027, as fuel costs pressure profitability despite recent ticket price increases. See our latest analysis for Air China. The share price is at HK$4.95, with a 7 day share price return of 3.12% following the DBS downgrade. However, the 30 day and year to date share price returns of 11.61% and 30.38% declines suggest momentum has been fading, despite a 1 year total shareholder return of 7.61%. If this shift in sentiment has you reassessing airlines, it could be a good moment to broaden your search with 95 top founder-led companies With Air China trading at HK$4.95, a discount to the HK$6.04 analyst target and a high intrinsic discount score, the key question is whether this reflects an undervalued recovery story or if the market already expects weaker future growth? AdvertisementPreferred Price-to-Sales of 0.4x: Is it justified? On a P/S of 0.4x, Air China is flagged as good value compared both to peers and to its own estimated fair P/S level, even with the shares at HK$4.95. The P/S multiple compares the company’s market value to its revenue and is often used for airlines where earnings can be volatile. At 0.4x, Air China is screening as inexpensive relative to the Asian Airlines industry average of 0.7x. This suggests the market is assigning a lower value to each unit of revenue than it does for many regional peers. In addition, the SWS fair ratio work suggests a P/S of 0.9x could be more in line with the company’s fundamentals. That is more than double the current multiple. This points to a gap between how the market is pricing Air China’s revenue stream today and where the fair ratio analysis indicates it could settle if sentiment and fundamentals align. Explore the SWS fair ratio for Air China Result: Price-to-Sales of 0.4x (UNDERVALUED) However, investors still need to weigh rising fuel expenses and ongoing net losses of CN¥1,770.393m, which could keep pressure on sentiment and timelines for any recovery. Find out about the key risks to this Air China narrative. Another View: Our DCF Model Paints a Different Picture While the P/S of 0.4x suggests good value against peers, the SWS DCF model is even more optimistic. It points to a future cash flow value of HK$20.72 per share versus the current HK$4.95, which implies a very large gap. Is that a margin of safety or a sign of over optimism? Look into how the SWS DCF model arrives at its fair value. 753 Discounted Cash Flow as at Apr 2026Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Air China for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 231 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity. Next Steps With sentiment clearly divided, it helps to look past the headlines and test the numbers yourself so you are not relying on any single view. To see what the market is optimistic about and which factors stand out, take a closer look at the 3 key rewards Looking for more investment ideas? If Air China has you rethinking your next move, this is the moment to scan wider so you do not miss opportunities sitting in plain sight.  Target potential mispricing by scanning for companies that combine quality and attractive valuations through the 231 high quality undervalued stocks. Prioritise resilience by reviewing companies that pass strict balance sheet and fundamentals checks with the solid balance sheet and fundamentals stocks screener (389 results). Hunt for underfollowed opportunities by using the screener containing 576 high quality undiscovered gems.   This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.New: Manage All Your Stock Portfolios in One PlaceWe've created the ultimate portfolio companion for stock investors, and it's free.• Connect an unlimited number of Portfolios and see your total in one currency• Be alerted to new Warning Signs or Risks via email or mobile• Track the Fair Value of your stocksTry a Demo Portfolio for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":false,"editions":null,"column":"","sentiment":"-1","news_tag":"","news_rank":0,"isVideo":false,"video":null,"symbols":[],"gpt_button":0,"need_auth":false,"need_login_tip":false,"code":"91000000","status":"200"}}}