AirAsia up 1.91% on upgrade, outlook for better 2Q results
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Shares of low-cost carrier AirAsia Bhd rose 1.91% at mid-morning today following an upgrade by CIMB IB Research as well as positive outlook for its second quarter earnings.
At 10.49am, AirAsia rose 6 sen to RM3.21 with 4.35 million shares traded.
CIMB Investment Bank Bhd upgraded AirAsia Bhd shares to “add” from “hold” after the stock’s recent drop and in anticipation that the budget airline will report better financials in the second quarter ended June 30, 2017 (2QFY17).
CIMB analyst Raymond Yap wrote in a note yesterday that the research house however maintained its AirAsia share target price at RM3.51.
“Upgrading AirAsia after recent share price correction,” Yap said.
“On a yoy (year-on-year) basis, we believe that AirAsia may deliver better results in 2QFY17F despite the ringgit being weaker by 5.7% yoy and the jet fuel price (inclusive of hedging) higher by 11% yoy. This is because we expect loads to be 4% pts higher yoy, offsetting most or all of the cost hikes.” he said.
AirAsia is scheduled to announce its 2QFY17 financials next month.
Questions & Answers
Q.What is the reason for the optimistic outlook despite currency and fuel price changes?
What is the reason for the optimistic outlook despite currency and fuel price changes?
CIMB believes AirAsia may deliver better results due to expected load increases of 4 percentage points year-on-year. This increase is anticipated to offset most or all of the cost hikes from a weaker ringgit and higher jet fuel prices.
Q.When is AirAsia expected to announce its second quarter financial results?
When is AirAsia expected to announce its second quarter financial results?
AirAsia is scheduled to announce its financial results for the second quarter ended June 30, 2017 (2QFY17) next month. This is when the improved financials are expected to be reported.
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