AirAsia, AirAsia X active on cheaper oil prices

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KUALA LUMPUR (Jan 14): Shares of AirAsia Bhd and AirAsia X Bhd were actively traded in the morning session as global oil prices continued slipping to six-year low of below US$50 per barrel.

As of midday, AirAsia (fundamental score 1.3, valuation score1.8) was traded at RM2.79, up 6 sen or 2.2% with some 6.57 million shares done.

The stock had earlier risen to a high of RM2.80 before trimming gains to its current price, for a market capitalisation of RM7.6 billion.

AirAsia X (fundamental score 0, valuation score 0.3) finished the morning trading session unchanged at 68.5 sen, with 3.78 million shares changing hands for a market capitalisation of RM1.624 billion.

Prior to this, the stock was up half a sen to its intra-morning high of 69 sen in early morning trades.

Regionally, Cathay Pacific Airways Ltd's shares expanded as much as 18 sen or 1.03% to HKD17.72 (RM8.18) as of noon.

Singapore Airlines, however, retreated 8 sen or 0.64% to $12.39 (RM33.20) as at midday.

It is understood that fuel is the largest expense for airlines operators. With the recent sharp fall in oil prices, airline operators are expected to save millions of dollar on their fuel costs.

In a note today, Maybank IB Research said with the price of Brent crude oil falling below US$60 (RM215.87) per barrel on Jan 2, 2015, one of the key beneficiaries of lower crude oil prices would be the airline industry, where jet fuel cost constituted a significant portion of direct cost.

"Airlines can then lower jet fuel surcharge which is expected to spur travel demand inspite of the implementation of goods and services tax (GST)," Maybank IB said.

At midday, Brent Crude Oil benchmark index was traded at US$46.25 per barrel, down 0.73% or 34 cent a barrel. While WTI Crude Oil Index declined 0.72% or 33 cent to trade at RM45.56 a barrel.

The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. A score of 0 means weak fundamentals and a score of 3 means strong fundamentals.

Meanwhile, the valuation score determines whether a stock is attractively valued, calculated based on historical numbers. A score of 0 means valuations are not attractive while a score of 3 means valuations are attractive.