DBS: China Southern Airlines – H: Hold Target Price HK$4.50; A: Hold Target Price Rmb7.30

Grounded for now

• Downgrade to HOLD with lower TP of HK$4.50 
• 1H22 net loss of RMB11.5bn was better than peers 
• CSA was the only airline among the big three to have positive EBITDA and operating cash flow in 1H22; net gearing ratio remains fairly stable 
• Cut FY22/23F net profit estimates to reflect slower recovery in passenger traffic