Hot Stock AirAsia dips below RM1 on lower 2Q profit

by **Cals** Sat 22 Aug 2015, 01:44

Hot Stock
AirAsia dips below RM1 on lower 2Q profit

KUALA LUMPUR (Aug 21): Shares of AirAsia Bhd fell below RM1 this morning on lower second quarter net profit ended June 30, 2015 (2QFY15) amidst broader market losses this morning.
At 10.33am, the third most actively traded counter dropped 1.49% or 1.5 sen to 99.5 sen with 21.242 million shares transacted, giving it a market capitalisation of RM2.8 billion. The FBM KLCI lost 4.07 points at the same time.
Yesterday, AirAsia reported a 33.8% year-on-year net profit drop to RM243.03 million or 8.7 sen per share in its 2QFY15 from 367.16 million or 13.2 sen per share last year mainly due to unrealised foreign exchange loss on borrowings as a result of a strong US dollar.
AirAsia said the unrealised forex loss of RM43.59 million was due to its US dollar-denominated borrowings as the ringgit was trading at 3.6717 against the greenback as at June 30, compared with 3.2298 as at June 30 a year ago.
A one-off cost related to the sale and leaseback of aircraft had also impacted its earnings in this quarter, it said.
Revenue came in 1.06% higher at RM1.32 billion in 2QFY15 compared with RM1.31 billion in 2QFY14, on the back of a 7% y-o-y growth in the number of passengers carried, in line with its capacity growth. It recorded an 80% load factor, consistent with the same period last year.
Meanwhile, the airline said that its Indonesian unit will issue redeemable and convertible preference shares (RCPS) instead of selling perpetual bonds to boost its shareholder’s equity by end-September to avoid having its operating licence revoked.
Last month, the budget carrier announced that its 49%-owned Indonesian associate PT Indonesia AirAsia (IAA)planned to sell perpetual bonds in a bid to raise over US$200 million (RM822.26 million).
“The [IAA] management has presented a plan to the Transport Ministry [in Indonesia] to sell perpetual bonds to take their financial position out of negative equity. However, IAA was advised to issue non-voting RCPS instead,” said AirAsia group chief executive officer Tan Sri Tony Fernandes.
Despite the weaker performance, Maybank IB analyst Mohshin Aziz mantained a “buy” call at a reduced target price of RM2.05 from RM2.32 on earnings revision.
Mohshin expected AirAsia (fundamental: 0.2; valuation: 2) to have an improved profit consistency in years ahead and opined that it was the cheapest low-cost carrier globally.
Public Investment Bank said for the first half of 2015 (1HFY15), AirAsia’s core net profit increased by 37.2% YoY to RM262.4m from RM191.3m in 1HFY14.
“Although core net profit only accounting for 40.7% and 43.3% of ours and consensus estimates respectively, the results were broadly in line as we expect a stronger 2HFY15 due to seasonality.
“Our “Outperform” call on AirAsia is maintained at the target price of RM1.88 tagged to 10 times FY16F EPS,” said its analyst Nur Farah Syifaa’ Mohamad Fu’ad.