Thursday 28 Mar 2024
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KUALA LUMPUR (April 6): Hong Leong IB Research has maintained its “Buy” rating on AirAsia Bhd at RM2.29 with a lower target price of RM3.11 (from RM3.30) and said the low cost carrier’s management was focusing on its yield enhancement and cost reduction initiatives; leveraging on MAS restructuring, improving fares (HLIB’s estimates at 8%), load factor (HLIB’s estimates at 78%) and ancillary income (HLIB’s estimates at 9.5%).

In a note today, the research house said AirAsia Malaysia and AirAsia Indonesia had frozen their marketing activities for the first half of 1Q15 in respect of QZ8501 incidents.

Nonetheless, it said management had restarted its marketing campaign by removing its fuel surcharge (passed fuel savings to consumers).

HLIB said the ringgit had depreciated to circa RM3.70/US$.

“Hence, we raised our US dollar estimates from RM3.50/US$ to RM3.60/US$.

“On associates, Thai AirAsia might experience risk of prolonged ban imposed by Japan, China and S. Korea, while AirAsia Indo is still in the midst of recovery from QZ8501 incidents. AirAsia Philippines and AirAsia India are on track with management initiatives.

“We remained upbeat with AirAsia initiatives to remain competitive and lower jet fuel price (US$122/bbl. For FY14 to US$80/bbl. For FY15) despite the unfavorable forex movement and short-term setback of QZ8501.

“Maintained Buy with lower target price of RM3.11 (from RM3.30) based on unchanged 10% discount to SOP,” it said.

 

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