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UBS lifts China Eastern Airlines to HK$7.8
 UBS Global Research lifted its target price for 
China Eastern Airlines (CEA)(00670) to HK$7.8 from HK$6.5, and maintained its "buy"rating.
  The research house said CEA's share price has rallied 15% year-to-date, but it has still
been underperforming Chinese peers. UBS believes the current forward P/BV of 1.1x does not
price in the expected 2018/19 ROE of 14%. The lower-than-peers' P/BV multiple also 
suggests that the higher leverage due to the lifting of the domestic price cap is not
priced in.
  It said CEA's 1Q 2018 results could be dragged down by high oil prices. However, UBS 
remains confident that earnings momentum will improve in 2Q due to: (1) the short slack
time between Chinese New Year and March when it expects business activities to begin to
pick up; (2) implementation of the new price ceiling in April; (3) no sign of a relaxation
of slot constraints in the April-September-2018 flight season based on schedule planning,
and (4) yield recovery at the Kunming's hub and international routes from a low base.
  UBS forecast 2018/19 domestic passenger yield to rise 5%/4%.

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