KUALA LUMPUR (July 3): CIMB Research has downgraded AirAsia X Bhd (AAX) to Reduce (from Hold) at 22 sen with a lower target price of 17 sen (from 70 sen) and said AAX was facing a mix of good and bad conditions that leave it struggling to get back into the black.

In a note July 2, the research said positives such as low oil prices and MAS’s capacity cuts are matched against higher costs due to the weaker ringgit and less robust outbound traffic from Japan and Australia.

“We downgrade from Hold to Reduce, and lower our target price, which is now based on CY15 P/BV of 1x, from a sector-average CY16 P/E of 11x.

“Our core EPS forecasts have been cut to losses for all years. De-rating catalysts include the continuing cash drain Switch to AirAsia Bhd,” it said.