Stock Name: AIRASIACompany Name: AIRASIA BHDResearch House: MIDF | Price Call: BUY | Target Price: 3.45 |
MIDF Research lowered its target price on AirAsia Bhd to RM3.45 from RM3.84 after Asia's largest budget carrier purchased an additional 100 Airbus A320 aircraft.
"We foresee short-term headwinds due to more intense competition from new entrant into its home market and increased uncertainties due to the stock removal from the benchmark stock index," the research house said in a note on Monday.
However, MIDF said the 9.4 billion deal with Airbus would further enhance AirAsia's position as the cost leader in the low cost carriers (LCC) industry.
"Our take on AirAsia is that, in time, it might even overtake the position of Ryanair Holdings Plc in Europe and Southwest in North America as the global leader of LCC given its high order-book for aircraft, and the huge population in Asia which is still under served," MIDF said.
The research house maintained its 'buy' rating on AirAsia shares. By 0929 a.m. (0129 GMT), shares of AirAsia dropped 2.25 per cent to RM2.61, underperforming the benchmark stock index's 0.44 per cent fall. -- Reuters