UBS has released a research report highlighting that despite a significant 58% year-on-year increase in fuel costs during the first half of the year, which accounted for 38% of Cathay Pacific (00293) operating expenses, the company's core net profit still grew by 45% year-on-year.

The bank notes that the second half of the year is typically a peak season, and with the Middle East geopolitical situation potentially impacting fuel prices downward, it expects further upside in the company's performance in the latter half. UBS forecasts that Cathay Pacific's full-year net profit will reach HK$13.9 billion, a 28% year-on-year increase, setting a new record.

UBS has raised its earnings forecasts for Cathay Pacific for 2026 to 2028 by 10% to 21% and projects an operating profit margin of 13% to 15% over that period. The bank maintains its "Buy" rating for the company and has raised the target price by 15%, from HK$16.9 to HK$19.40.