MAS to be profitable in 2H13, says Maybank IB Research

MAS to be profitable in 2H13, says Maybank IB Research
Business & Markets 2013
Written by theedgemalaysia.com
Monday, 29 July 2013 09:55

KUALA LUMPUR (July 29): Maybank IB Research has upgraded Malaysian Airline Systems Bhd (MAS) to a Buy (from Hold) at 31 sen with a target price of 35 sen based on 1.2x 2013 P/B which it said was in-line with regional peers, and said forecast MAS will be profitable in 2H13 and generate positive cashflow.

In a note Monday, the research house said the stock had plummeted by 23% since its Sell call at end of May.

“We think this is overdone as MAS’ current market capitalisation of RM5.1 billion is roughly equal to its cash pile. We forecast MAS will be profitable in 2H13 and generate positive cashflow. Therefore MAS should trade above its current book value to reflect its improving business outlook.

“MAS will release its 2Q13 results on 31 July. 2Q is a seasonally weak quarter, and we expect MAS to post a core loss of MYR34.6m (+78% YoY, +90% QoQ). This strong improvement is due to higher load factors and lower fuel price of USD124.4/bbl (-5.8% YoY, -7.9% QoQ).

“MAS should be profitable in 2H13 as it enters into its seasonally strong quarters of 3Q (strongest) and 4Q (second strongest) and benefits from lower operating cost from new aircraft induction. We upgrade the stock to a Buy (from HOLD) as the share price has plunged into value territory.