KUALA LUMPUR (Jan 5): Low cost airlines are seen to be outperformers of transport earnings for 2015, according to Affin Hwang Capital Investment Bank Bhd.

“We continue to take the view that the most lean and disciplined airlines in terms of cost will prevail against a challenging economic environment, stiff competition as well as a weakening ringgit,” said transport & logistics analyst Sharifah Farah of Affin Hwang Capital.

Sharifah pointed out that the direction of jet fuel price as well as the US dollar against the ringgit will be the two top key focus for the sector.

“Our simulation indicates that for every US$5 drop in jet fuel (all else equal), it will lift earnings by 10-13%. However, this will be mitigated by weaker ringgit against the US dollar. Companies with US dollar loan will also be negatively impacted,” she said.

She adds that the International Air Transport Association (IATA) expects airlines for the Asia Pacific region to continue to post a net profit of US$ 5 billion (RM 17.5 billion) in 2015, up from US$ 3.5 billion (RM12.36 billion) in 2014.

Out of the four transport & logistics stocks covered by the investment bank, AirAsia Bhd was the sole company which retained the “Buy” rating with a target price of RM3.25 per share.

AirAsia X Bhd retained its “sell” rating with a target price of 45 sen per share. MISC Bhd and Malaysia Airports Holdings Bhd both remained at  “Hold” rating with a target prices of RM7.40 and RM6.20 respectively.

Theedgemarkets.com placed a valuation score of 1.8 out of 3 and a fundamental score of 1.3 out of 3 for the AirAsia.

Following the disappearance of AirAsia flight QZ8501 last Sunday, AirAsia shares fell as much as 13% to a low of RM2.56 last December 29.

At 10:25 am today, shares of the low cost carrier fell 8 sen to RM2.67 with some 12 million shares traded.