Company Name: AIRASIA BHD
| Research House: ALLIANCE | Price Call: BUY | Target Price: 2.60 |
KUALA LUMPUR: AirAsia Bhd shares were actively traded this morning on expectation of better earnings from higher fuel cost savings.
At 10.25 am, AirAsia shares were two sen better at RM2.20 with 5.46 million shares changed hands.
AllianceDBS Research said fuel cost savings were not apparent in the fourth quarter financial year 2014 due to previous fuel hedges made at a higher price of US$115 per barrel and the stronger greenback.
"We expect fuel cost savings to be more apparent starting in the first quarter financial year 2015, given the cheaper average hedged cost of US$98 per barrel.
"This is expected to further fall to US$88, US$84 and US$84 per barrel in the second, third and fourth quarter respectively," it said in a research note today.
The research house said other developments including the potential of the airline company selling a stake in its leasing arm to strategic investors following a successful divestment of a 25 per cent stake in AAE Travel Pte Ltd (AAE) to Expedia Inc for US$86.25 million.
It said the disposal was to realise the value from AirAsia fleet of aircraft and could fetch a valuation of US$300 million, assuming only 45 aircraft were injected into it.
AllianceDBS has upgrade AirAsia to a "Buy" from "Hold" but maintained the target price at RM2.60. - BERNAMA
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