Earnings forecasts and valuation
Given weaker fuel cost pass-through, we cut our 2026E earnings forecast, expecting an attributable net loss of RMB6,840mn (previous: +RMB1,567mn), and lower our 2027/2028 forecasts by 47%/35% to RMB3,684/7,542mn. We forecast 2027E BVPS of RMB1.79. The company's 10-year average A/H-share PB is 2.5x/1.5x. Assuming oil prices stabilize, the industry should remain on an upward trajectory, driving a breakthrough in ROE and other profitability metrics. We assign a premium to 2027E PB of 3.8x/2.6x (previous: 2026E PB of 3.8x/2.6x), with target prices of RMB6.80 for the A-share and HKD5.40 for the H-share (previous: RMB7.80/HKD6.10; latest HKD/RMB exchange rate: 0.86). Maintain BUY.
Risks: weaker demand recovery than we expect, faster industry fleet expansion than we expect, higher maintenance and other cost growth than we expect, oil price and FX volatility, dilution risk from private placement, and safety incidents.