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Tuesday, December 4, 2012

AIRASIA - Good Buy or Goodbye

AirAsia’s 3QFY12 net profit stands at RM163.9 mil, dropped by 10.4% compared to the previous year. The decline was mainly attributed to the higher start-up losses in its Japan and Philippines associates and delayed recognition of airport incentives which amounted to RM22m in 3QFY11. In other parts, Thai AirAsia reported an increase in net profit of +3%yoy to THB199.1m and contributed RM9.0m to the group in 3QFY12.




According to management, the group will launch more new routes and increase frequencies on a few routes for FY13 upon taking delivery of 28 A320 aircraft in 2013 (+7 from 21 aircrafts guided previously), which will be deployed in Malaysia (10), Thailand (9) and Indonesia (9). Next year, the group will add 4-5 aircrafts for AirAsia Japan and 3 aircrafts for AirAsia Philippines.


November 2012 Call and Target Price by Research Houses


MIDF  -  Maintain BUY with unchanged target price of RM3.84
TA  -  Maintain BUY with a revised lower target price of RM3.50
RHB  -  Upgraded to OUTPERFORM with fair value of RM3.61
OSK  -  Maintain BUY call with a target price of RM3.39
KENANGA  -  Maintain BUY call with a lower target price of RM3.07
HWANGDBS  -  Maintain HOLD with a targer price of RM2.90
CIMB  -  Maintain HOLD with a target price of RM3.00
AMMB  -  Maintain HOLD with an unchanged fair value of RM2.80

Will the entry of Malindo Airways in 2013 pose a significant treat to AirAsia. It is a fact that there is a certain over reaction by the market to the Malindo news which causes the stock price to dive. AirAsia reiterated that low cost is its key weapon against any new competitor.

AirAsia is last traded at RM2.83.