KUALA LUMPUR (Sept 15): CIMB Research has maintained its Neutral rating on the aviation sectot and said Khazanah Nasional Bhd’s blueprint for the restructuring of The National Carrier (TNC) would benefit AirAsia Bhd.
In a note Sept 14, the research said that certain views on the street were diametrically opposed to its own.
“We keep our Neutral sector call but highlight our Add call on AirAsia with a higher target price of RM3.25, and our Hold call on MAHB with a lower target price of RM7.20.
“We have cut our EPS estimates for MAHB as TNC is likely to cut capacity in 4Q14, which would be a key share price catalyst for AirAsia,” it said.
CIMB Research said AirAsia would be one of the key beneficiaries of any capacity cuts by TNC, its main competitor.
“We expect TNC to cut long-haul international, domestic and short-haul international routes. AirAsia will also benefit from a recovery in aircraft utilisation in 2H14,” it said.
CIMB Research also said AirAsia X (target price: 72 sen) was likely to benefit from TNC’s possible capacity cuts to Australia.
“However, we shy away from the stock because its business model is much riskier than AirAsia’s. AAX’s new hubs in Bangkok and Bali could also incur significant start-up losses,” it said.
Meanwhile, the research house said MAHB’s passenger traffic growth was suffering from the falling domestic and international travel demand in July and August.
“We expect it to fall further when TNC cuts capacity in 4Q14 onwards,” it said.