KUALA LUMPUR: CIMB Research has maintained its Outperform rating on MALAYSIAN AIRLINE SYSTEM BHD [] (MAS) with a target price of RM2.30 based on an unchanged core P/E multiple of 7 times due to its continued long-term confidence in MAS's fleet renewal.
The research house said on Friday, April 15 that during the welcoming ceremony for MAS's first A330-300 delivery, the airline revealed measures to cope with higher fuel prices, including raising fuel surcharges to cover some 50% of the cost increase since the start of the year and scaling back its 2011 capacity growth from 10% to only 4%.
The fleet renewal programme was also continuing with the delivery of 12 new-generation planes by year-end, it said.
'Unfortunately, these measures will not come fast enough to prevent a set of weak 1H results due to cost pressures and the impact of Japan's earthquake on demand.
'Potential re-rating catalysts include continuing reforms to boost structural profitability. Our earnings forecasts are unchanged,' it said.
The research house said on Friday, April 15 that during the welcoming ceremony for MAS's first A330-300 delivery, the airline revealed measures to cope with higher fuel prices, including raising fuel surcharges to cover some 50% of the cost increase since the start of the year and scaling back its 2011 capacity growth from 10% to only 4%.
The fleet renewal programme was also continuing with the delivery of 12 new-generation planes by year-end, it said.
'Unfortunately, these measures will not come fast enough to prevent a set of weak 1H results due to cost pressures and the impact of Japan's earthquake on demand.
'Potential re-rating catalysts include continuing reforms to boost structural profitability. Our earnings forecasts are unchanged,' it said.
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