Huatai Securities maintained a Buy rating for China Southern Airlines due to a significant recovery in net profit, which reached RMB1.481 billion in the first quarter, despite being below expectations. The airline is well-positioned to pass on rising fuel costs to passengers, and the overall industry is expected to recover from its cyclical low, leading to a new earnings cycle. The broker also raised its earnings forecasts for 2026, 2027, and 2028, reflecting stronger-than-expected fuel cost pass-through.
