DBS: Air China – H: Fully Valued Target Price HK$4.20; A: Fully Valued Target Price Rmb7.00

Unattractive valuation and slow recovery

• Downgrade to FULLY VALUED with lower TP of HK$4.20
• 1H22 net loss of RMB19.4bn is a record low, equivalent to two-three years of annual profit prior to COVID-19
• Cut FY22/23F net profit estimates to factor in higher rate of lockdowns and lack of visibility on resumption of international flights 
• Stark divergence between share price performance and fundamentals underpins our FULLY VALUED call