MAS turnaround possible, RHB Research keeps Buy at RM1 FV

KUALA LUMPUR: RHB Research is maintaining its view that Malaysian Airline System Bhd (MAS) could turnaround and it is keeping its buy recommendation with a fair value of RM1 before the rights shares go ex.
It
said on Friday the factors for the turnaround were strong passenger
feeds from the oneworld alliance that may eventually improve its yield
and load factor.
Other factors were that the routes
rationalisation were showing positive results while effective cost
control might eventually improve MAS' profit margin.
"The first quarter current year 2013's operating stats were encouraging, and this reaffirms our positive view," it said.
"Therefore,
we are keeping our Buy recommendation on MAS and RM1 FV (ex-rights FV
50 sen), based on an unchanged 9.0 times FY14 adjusted enterprise
value/earnings before interest, tax, depreciation, amortisation ratio
(EV/EBITDAR)," it said.
According to readyratios.com, EV/EBITDA
ratio is a comparison of enterprise value and earnings before interest,
taxes,depreciation and amortization.
It explains that this is a
very commonly used metric for estimating the business valuations. It
compares the value of a company, inclusive of debt and other
liabilities, to the actual cash earnings exclusive of the non-cash
expenses.