KUALA LUMPUR (Nov 3): RHB Research Institute Sdn Bhd has maintained its "buy" rating on AirAsia X Bhd (AAX) with a target price of 46 sen and said it expects the company to report stronger year-on-year (y-o-y) third quarter earnings.

In a note today, RHB Research said AAX is expected to report 3Q17 results at end-Nov 2017.

RHB Research said its expectation is supported by a 23% y-o-y uptick in passengers carried and a 1 percentage point (ppt) improvement in load factor for its Malaysian operations in 3Q17.

It explained this was on the back of an aggressive 21% y-o-y growth in capacity over the same period.

RHB Research said that on a nine-month year-to-date basis, AAX's load factor improved 3ppts to 81% despite a 24% y-o-y increase in capacity via higher aircraft utilisation and flight frequencies.

It said this was in line with its load active, yield passive strategy.

"We are positive on AAX's plans to realign some of its routes in Australia and introduce more North Asian destinations, as this should allow for more consistent quarterly earnings going forward.

"Key catalysts for the stock would include stronger-than-expected sequential quarter-on-quarter earnings and a turnaround of its Indonesia operations.

"We maintain Buy on the stock with a target price of 46 sen (18% upside)," it said.

At 10.34am, AAX was flat at 39 sen with 9.67 million shares done.