The Borneo Post

Maybank IB maintains positive view on aviation sector

-

Maybank Investment Bank Bhd (Maybank IB) maintained its positive view on the aviation sector amid rising tensions in the Middle East, potential impacts on passenger traffic to and from the region, alongside fluctuatio­ns in jet fuel prices.

However, it estimated that under a worst-case scenario where passenger traffic to and from the Middle East ceases completely, MAHB’s earnings are projected to slide by 26 per cent on a full-year basis, while its share target price (TP) will be cut to RM6.61 (-26 per cent).

“We fear that passenger traffic to and from the Middle East will impact its Malaysian and Turkish operations. MAHB has not released its 2023 airport statistics which details passenger traffic from that region.

“Examining its 2019 (prepandemi­c) airport statistics, passenger traffic to and from the Middle East accounted for seven per cent of internatio­nal passenger traffic at KLIA and 28 per cent of internatio­nal passenger traffic at Istanbul Sabiha Gokcen,” it said in a research note yesterday.

As for Capital A and AAX, Maybank IB said the main concern is the impact of higher jet fuel prices as none of Capital A’s four airlines fly to Middle East destinatio­ns.

“At press time, spot jet fuel prices have not deviated far from our forecast of US$105 per barrel at US$104 per barrel.

“AAX does fly to Jeddah, Saudi Arabia but we understand that this destinatio­n accounts for only between 5.0-7.0 per cent of its total available seat kilometres, but like Capital A, our main concern for AAX is higher jet fuel prices,” it added.

The investment bank estimated that every US$1 per barrel increase in jet fuel price will lower its core net profit estimates by RM14 million and sum-of-parts-based (SOP) TP by 24 sen.

It further said that earnings estimates, calls and TPs are under review. — Bernama

Newspapers in English

Newspapers from Malaysia