KUALA LUMPUR (Feb 27): Shares of low-cost carrier AirAsia Bhd dipped as much as 5.18% in the morning trades to RM2.56 after reporting a net loss of RM428.51 million in its 4QFY14 yesterday.

At 10:49 am, the counter pared some losses to be traded at RM2.61, a decline of 3.33% or 9 sen as opposed to yesterday’s closing price. The stock saw some 3.84 million shares changing hands.

Nevertheless, TA Research analyst Tan Kam Meng said in a note today that it is maintaining its target price at RM3.40, based on unchanged 14 times CY15 earnings per share.

“In the current low jet fuel price environment, the market sentiment on airlines stocks will remain buoyant and we believe this situation would prolong until 2016,” Tan said.

Echoing Tan, AmResearch analyst Hafriz Hezry said it is also maintaining its “buy” rating on AirAsia with higher fair value of RM3.30 per share given the upward adjustments to its FY15F forecast.

Hafriz opined, “The key drag of higher-than-expected jet fuel cost was merely timing effect of uncovered purchases as well as hedging losses and does not derail our thesis of a strong rebound in FY15F earnings.”

To recap, AirAsia Bhd (fundamental score: 1.30; valuation score: 1.80) swung to a net loss in its fourth quarter ended Dec 31, 2014 (4QFY14), to RM428.51 million from a net profit of RM168.5 million a year ago due to foreign exchange (forex) losses and higher financing and operating costs, coupled with higher taxation.

Loss per share was 15.4 sen compared with earnings per share of 6.1 sen. Revenue, however, climbed 15.8% to RM1.48 billion from RM1.28 billion in 4QFY13.  

 “The adverse movement in the exchange rate, which has gone up by 7% y-o-y, resulted in unrealised forex losses on US dollar-denominated borrowings that are translated at the closing rate of each reporting date,” it said in a statement yesterday.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)