January 22, 2011

Cebu Pacific - A Great Bargain - BUY

Cebu Pacific's IPO price was P125. It was a buy on this price but the prospect of stiff competition moving forward with the entry of several budget airlines namely Zest Air, Air Asia, Airphil Express and Tiger Airways. It's price suffered because of this sentiment. It has gone down to P90-P100 territory.

Analyst from different financial provider said that the true valuation of Cebu Pacific is around P140+. They had a record breaking 2010 revenue and more brand new planes are coming to service international routes. They are also adding more schedules and are opening more international destinations.

In my own opinion, other carrier should be wary of Cebu Pacific instead of the other way around. Why?

1. They have a great management team
2. They are adding international routes eating up the competition
3. They have newer and more efficient planes
4. They have the Go Hotel concept which I think is a great way to synergise with their real estate(hospitability business) sister companies
5. They provide one of the best online deals

The price is so cheap now, Cebu Pacific thinks the company is undervalued that they are buying back shares. Last time I check the mother company bought 4.62 million shares.

They need to improve on their customer service though.

Website: www.cebupacificair.com

PSE Stock Info: CEB

No comments: