KUALA LUMPUR: Shares of MALAYSIAN AIRLINE SYSTEM BHD [] (MAS) and AIRASIA BHD [] fell in early trade on Wednesday, Aug 24 after the airlines posted vastly different results but said that fuel prices remained a concern.
At 9.15am, MAS fell four sen to RM1.60 while AirAsia lost 11 sen to RM3.52.
MAS' net loss for the second quarter ended June 30, 2011 narrowed to RM526.68 million compared with net loss of RM534.73 million a year ago
as it continued to be impacted by the high fuel prices.
AirAsia reported earnings of RM104.25 million in the second quarter ended June 30, 2011 as its operations were affected by higher fuel costs, which rose 31%. Net profit fell 47.5% from the RM298.93 million a year ago.
MIDF Research has cut its target prices for both airlines. It slashed MAS' FY11 and FY12 earnings significantly to reflect the expected poor performance ahead.
'Switching our valuation to price-to-book value (PBV) method as we expect MAS to be loss making in FY12, we arrive at a target price of RM1.60 pegged to 2.0 times PBV, which is the regional peers' average.
'We downgrade our recommendation to TRADING SELL as we believe MAS' poor 2Q11 performance will dampen sentiment towards the stock,' it said on Aug 24.
On AirAsia, the research house said it was tweaking its forecasts for FY11 and FY12 downwards by -28.8% and -19.0% to take into account the higher deferred tax and the lower forex gains.
'Rolling over our valuation to FY12, we arrive at a revised target price of RM4.15 (from RM4.60). We maintain our TRADING BUY recommendation as we believe that the good operational performance will stir interest in the stock in the near term,' it said.
MIDF Research said while it expects that global economic conditions to remain uncertain, it said AirAsia was well situated to weather the storm due to its position as a low cost carrier.
'Our target price is derived by pegging its FY11 EPS to PER of 12.8 times, which is a 25% premium to its peers,' it said.
At 9.15am, MAS fell four sen to RM1.60 while AirAsia lost 11 sen to RM3.52.
MAS' net loss for the second quarter ended June 30, 2011 narrowed to RM526.68 million compared with net loss of RM534.73 million a year ago
as it continued to be impacted by the high fuel prices.
AirAsia reported earnings of RM104.25 million in the second quarter ended June 30, 2011 as its operations were affected by higher fuel costs, which rose 31%. Net profit fell 47.5% from the RM298.93 million a year ago.
MIDF Research has cut its target prices for both airlines. It slashed MAS' FY11 and FY12 earnings significantly to reflect the expected poor performance ahead.
'Switching our valuation to price-to-book value (PBV) method as we expect MAS to be loss making in FY12, we arrive at a target price of RM1.60 pegged to 2.0 times PBV, which is the regional peers' average.
'We downgrade our recommendation to TRADING SELL as we believe MAS' poor 2Q11 performance will dampen sentiment towards the stock,' it said on Aug 24.
On AirAsia, the research house said it was tweaking its forecasts for FY11 and FY12 downwards by -28.8% and -19.0% to take into account the higher deferred tax and the lower forex gains.
'Rolling over our valuation to FY12, we arrive at a revised target price of RM4.15 (from RM4.60). We maintain our TRADING BUY recommendation as we believe that the good operational performance will stir interest in the stock in the near term,' it said.
MIDF Research said while it expects that global economic conditions to remain uncertain, it said AirAsia was well situated to weather the storm due to its position as a low cost carrier.
'Our target price is derived by pegging its FY11 EPS to PER of 12.8 times, which is a 25% premium to its peers,' it said.
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