Stock Name: MAS
Company Name: MALAYSIAN AIRLINE SYSTEM BHD
Company Name: MALAYSIAN AIRLINE SYSTEM BHD
| Research House: HLG | Price Call: SELL | Target Price: 0.82 |
MAS (SELL)
Disappointment; Potential Fund Raising
- Reported 4Q11 core loss of RM231.8m despite seasonally stronger quarter.FY11 core loss of RM1.3bn results came in line with ours and consensusestimates of RM1.2bn loss.
- Losses in FY11 are due to provisions of RM1.1bn for stock obsolescence,impairments of freighter aircrafts and redelivery cost of aircrafts in 4Q11.
- Overall operating costs increased by 14.6% yoy, driven by high jet fuelcosts of average US$125/bbl in FY11. Also, FY11 was affected by forex losses ofRM129m and lower derivative gain of RM61m.
- Net gearing increased to 4.35x from the drop in cashlevel to RM1bn while total debt increased to RM5.7bn.
- We maintain that there is high possibly of cash callexercise due to the urgent cash needs to fund the operating losses, potentiallyhigh restructuring cost and new delivery of aircrafts.
- We cut FY12-13 earnings to losses of RM1bn (from losses of RM668m) andRM430m (from profits of RM261m). Introduced FY14 earnings of RM42m.
- Target Price is cut to RM0.82 (from RM1.19) based on 6.5x ofEV/EBITDAR. Maintain SELL.
Source: HLIB Research 1 March 2012
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