Thursday 28 Mar 2024
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KUALA LUMPUR (May 29): AirAsia Bhd saw its share price rise as much as 5.3% in mid-morning trades, after the low cost carrier returned to black in its first quarter ended March 31, 2015 (1QFY15), following a net loss in 4QFY14.

At 10.52am, AirAsia (fundamental: 0.2; valuation: 0.8) gained 7 sen or 3.4% to RM2.15, with some 5.5 million shares done. Earlier, it gained as much as 11 sen or 5.3% to reach a high of RM2.19.

In a filing yesterday, the group reported net profit of RM149.33 million or 5.4 sen per share for the quarter, up 6.9% from RM139.72 million or 5 sen per share a year ago. In 4QFY14, it reported a net loss of RM428.51 million.

Meanwhile, revenue fell by a marginal 0.4% to RM1.297 billion for 1QFY15, compared with RM1.302 billion for 1QFY14.

In a note today, PublicInvest Research said AirAsia posted “commendable” results for the quarter, and had maintained its “outperform” call on the stock, with a target price of RM3.08.

“Excluding one-off items such as forex gain/loss, tax incentives, gain on disposal of AirAsia Expedia (AAE) and provision for loss on aircraft held for sale, AirAsia recorded 1QFY15 core net profit of RM152.9 million (1QFY14: RM123.5 million, 4QFY14: RM101.2 million),” it said, adding that the core net profit was above estimates.

PublicInvest said AirAsia had benefitted from lower fuel cost and higher ancillary revenue per pax, despite its load factor being below 80% for the quarter.

Going forward, the research house said the group will have a healthier competition environment as Malaysian Airline System Bhd (MAS) undergoes restructuring, while ancillary income is expected to slowly gain pace.

Meanwhile, the lower fuel prices will also help drive its earnings, with hedging at 50% of its fuel usage at an average cost of US$88 per barrel for FY15.

Although, the group’s performance will still be dependent on competition and volatility of US dollar against RM, nevertheless, we remain optimistic on AirAsia on its low cost carrier advantage, lower fuel prices and MAS’ restructuring plan.

(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.)

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