KUALA LUMPUR (Dec 15): PublicInvest Research has maintained its “Outperform” rating on AirAsia Bhd at RM2.73 with a higher target price of RM3.30 (from RM2.78) and said it liked AirAsia for its long-term growth prospects, low-cost competitive advantage, network connectivity and synergies within the AirAsia group.

In a note Monday, the research house said an upsurge in RASK and weakness in fuel prices will be the catalysts for AirAsia’s growth next year.

“We also expect to see an improvement in its operations in the coming financial year, aided by recent drop in fuel prices, associates’ improvements and recovery in its yields.

“We maintain our Outperform call and increase our target price to RM3.30, from RM2.78 previously, still pegging it to a 10x multiple to our FY15F EPS as we lower our fuel price, capex and depreciation assumptions, resulting in an increase to our core net profit forecast by 7%-18% for FY15F and FY16F,” it said.

The research house said while AirAsia’s performance will be dependent on competition, fuel costs and foreign exchange rate, PublicInvest Research remains positive on its prospects, especially from MAS’ restructuring plan to remove capacity from its loss-making routes which will help AirAsia in pushing up yields and load factors, resulting in improved profitability.  

At 9.34am, AirAsia fell 0.71% or two sen to RM2.80 with 1.44 million shares done.