RHB Research keeps 'buy' call on AirAsia

LOW-COST carrier AirAsia Bhd is expected to post a decent core net profit of RM705 million, given significant improvements in its overall associates' earnings.

Given the expectations, RHB Research Institute Sdn Bhd has slashed AirAsia's 2014 and 2015 earnings forecasts by 17 per cent and three per cent, respectively.

This is due to the lower contributions from Indonesia AirAsia and Thai AirAsia on escalating competition and a political crisis in Thailand, which are compressing yields, the research firm said in a report yesterday.

AirAsia is expected to release its 2013 full-year financial results on February 26.
RHB Research also expects the airline's fourth quarter 2013 net earnings to rise eight per cent year-on-year, given the significant improvements in overall associates earnings.

The airline reported a 11.4 per cent year-on-year revenue passenger kilometre growth in 2013, which exceeds RHB Research's forecast by 1.2 per cent.

Its load factor was also healthy at an unchanged 80 per cent.

RHB Research said it is factoring a modest eight per cent year-on-year growth for AirAsia's 2014 financial performance as the airline will be less aggressive in growing its seat kilometre capacity.

The research firm maintained its "buy" call on the airline with a target price of RM3.08.

AirAsia's share price fell one sen to close at RM2.30 on Bursa Malaysia yesterday.