May 18, 2010

MAS - CIMB Research retains outperform on MAS

Stock Name: MAS
Company Name: MALAYSIAN AIRLINE SYSTEM BHD
Research House: CIMB

KUALA LUMPUR: CIMB Equities Research is maintaining its earnings forecasts, RM3 target price (unchanged 6.0 times CY12 core price-to-earnings) and Outperform recommendation on MALAYSIAN AIRLINE SYSTEM BHD [] (MAS).

"Potential re-rating catalysts include the global yield recovery and a structural cost reduction from FY11 onwards," it said on Tuesday, May 18.

MAS incurred a core net loss of RM224 million in the first quarter ended March 31. The 1Q loss, when annualised, worked out to 13% below the research house's full-year loss forecast of RM1.026 billion.

"However, we consider this to be broadly in line as the seasonally stronger 2H may be offset by potentially higher jet fuel prices," it said.

CIMB Research said the core net loss narrowed from RM793m in 1Q09 and also from a loss of RM287m in 4Q09.

Despite the rising jet fuel price, MAS achieved a lower loss on the back of yoy and qoq improvement in cargo profits as well as narrower passenger losses on yoy basis.

The reported 1Q net profit was RM310m, partly due to RM329m exceptional income received in compensation for A380 delays in 2007-11.

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