Affin IB Research maintains Buy on AirAsia, lowers target price to RM3.80

Affin IB Research maintains Buy on AirAsia, lowers target price to RM3.80
Business & Markets 2013
Written by theedgemalaysia.com
Wednesday, 14 August 2013 08:42

KUALA LUMPUR (Aug 14): Affin IB Research has maintained its Buy rating on AIRASIA BHD [] at RM3.17 with a lower target price of RM3.80 (from RM3.90) after the research lowered its FY13-15 earnings forecast for the airline by circa 3% after updating the audited FY12 figures.

In a note Wednesday, the research house said AirAsia is scheduled to release its 2QFY13 results on the 21st August.

“Based on the strong set of operating statistics, we expect 2Q13 revenue to come in stronger than the RM1.3 billion registered in 1Q13, it said.

Affin Research said the airline carried 5.5 million passengers in 2Q13 (+6.7% q-o-q; +12.4% y-o-y).

The research house said it believed operating margin would likely improve in view of the softer jet fuel price.

It said that in 2Q13, the average jet fuel price was US$116/barrel, which was 9.6% lower q-o-q, but only 4.5% lower y-o-y.

“We have lowered our FY13-15 earnings forecast by c.3% after updating the audited FY12 figures. As such, we have also cut our target price to RM3.80 (from RM3.90 previously) based on an unchanged 12x CY14 EPS (+1SD above its 3-year average).

“Re-rating catalysts include further improvement in yield and load factor and a sustained decline in jet fuel price. In addition, AirAsia is working on listing IAA by 1Q14. Risks to our recommendation include strong foreign selling (52% as at Jun 2013) and reversal in jet fuel price,” it said.