Cathay Pacific's passenger volume growth pegged to hit 7% in 2014E

Thanks to stronger economies.

According to Barclays, he company's passenger volumes returned to growth in Jun 2013 and continued to accelerate to +4.6% y/y in Jul-Oct 2013.

They expect the passenger volume growth to continue accelerating to +7.0% y/y in 2014E and +7.1% y/y in 2015E, driven by stronger economies in HK, the US and the UK.

Here's more from Barclays:

We raise EPS by 8-10% for 2013-15E and lift the PT from HK$17.51 based on 1.1x 2014E P/B to HK$19.26 based on 1.2x, in line with the stock's historical average.

We raise RPK growth forecasts for 2014-15E in anticipation of stronger growth in the major markets, and reduce fuel price assumptions given the company's hedging position.

We find the stock's valuation attractive at 1.0x 2014E P/B, which represents an attractive entry point below the stock's historical trading average and ahead of strong earnings recovery in 2014-15E, in our view.