Stock Name: AIRASIA
Company Name: AIRASIA BHD
Research House: OSK
KUALA LUMPUR: Shares of low-cost carrier AirAsia rose to RM3 in afternoon trade on Tuesday, May 3 but Malaysian Airline System (MAS) struggled below RM2, weighed by high fuel costs.
At 2.32pm, AirAsia was up 13 sen to RM3 with 7.37 million shares done, the highest since January.
MAS, meanwhile, shed one sen to RM1.81 with 203,900 shares done.
OSK Research after the drop in AirAsia's share price since the start of 2011, the announcement of its symbolic maiden dividend and the imposition of a fuel surcharge starting May and its encouraging 1Q traffic numbers should bring AirAsia back into the limelight of investors.
It said the surcharge should lift FY11 earnings by 4.15% while the traffic number, where group revenue per kilometre was up 26% on-year.
'The stock's valuations remains attractive, currently trading at a 34% discount against its peers, while the upcoming IPO of its two associates is expected to further crystallise valuations. Following the 4.15% upward revision in FY11 earnings from the fuel surcharge, we continue to retain our BUY recommendation at a higher fair value of RM3.57 premised at 12x FY11 EPS,' it said.
As for MAS, analysts were impressed by the national carrier's younger fleet plant which was anticipated to be MAS' key earnings kicker for a turnaround on better fuel burn, lower maintenance costs, and more reliability and flying hours.
However, they were concerned about the impact of the high oil prices.
A local research house said its higher revised oil price assumption prompted it to downgrade its earnings by 18% for FY11-FY12, which accordingly entailed a downgrade to SELL at a lower fair value of RM1.60, premised on 8.5 times enterprise value/earnings before interest, tax, depreciation and amortisation.
Company Name: AIRASIA BHD
Research House: OSK
KUALA LUMPUR: Shares of low-cost carrier AirAsia rose to RM3 in afternoon trade on Tuesday, May 3 but Malaysian Airline System (MAS) struggled below RM2, weighed by high fuel costs.
At 2.32pm, AirAsia was up 13 sen to RM3 with 7.37 million shares done, the highest since January.
MAS, meanwhile, shed one sen to RM1.81 with 203,900 shares done.
OSK Research after the drop in AirAsia's share price since the start of 2011, the announcement of its symbolic maiden dividend and the imposition of a fuel surcharge starting May and its encouraging 1Q traffic numbers should bring AirAsia back into the limelight of investors.
It said the surcharge should lift FY11 earnings by 4.15% while the traffic number, where group revenue per kilometre was up 26% on-year.
'The stock's valuations remains attractive, currently trading at a 34% discount against its peers, while the upcoming IPO of its two associates is expected to further crystallise valuations. Following the 4.15% upward revision in FY11 earnings from the fuel surcharge, we continue to retain our BUY recommendation at a higher fair value of RM3.57 premised at 12x FY11 EPS,' it said.
As for MAS, analysts were impressed by the national carrier's younger fleet plant which was anticipated to be MAS' key earnings kicker for a turnaround on better fuel burn, lower maintenance costs, and more reliability and flying hours.
However, they were concerned about the impact of the high oil prices.
A local research house said its higher revised oil price assumption prompted it to downgrade its earnings by 18% for FY11-FY12, which accordingly entailed a downgrade to SELL at a lower fair value of RM1.60, premised on 8.5 times enterprise value/earnings before interest, tax, depreciation and amortisation.
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