‘Neutral’ rating on aviation industry
KUALA LUMPUR: Kenanga Research is projecting a gradual recovery of air travel from the second half of this year with the availability of Covid-19 vaccines.
The research house, in a note yesterday, reiterated its “neutral” call for the aviation industry.
Malaysia Airports Holdings Bhd (MAHB) and AirAsia Group Bhd both came in below expectations in the fourth quarter of last year.
MAHB’s revenue fell 34 per cent due to the re-imposition of the Conditional Movement Control Order (CMCO) across Malaysia, and a curfew re-imposition in Turkey in November due to a resurgence of Covid-19 cases.
Passenger traffic at its Malaysian operations contracted 53.3 per cent to 2.1 million passengers compared with 4.5 million passengers in the preceding quarter.
However, Kenanga Research said the yet-to-be-signed Operating Agreement (OA) could be an impetus for a re-rating catalyst for MAHB.
“We believe the new OA will be investor-friendly and result in a sustainable long-term development of MAHB.
“We raise our target price forecast for MAHB to RM7.50 from RM6.86 with an ‘outperform’ rating.”
Meanwhile, the research house expects airlines, including AirAsia, to continue facing tougher operating conditions at least in the first half of this year.
AirAsia, faced losses due to collapse in passenger loads and cash flows challenges, was in need to raise capital, it added.
“We view its recent fund raising via new shares issue to shore up liquidity positively as an interim measure to address its immediate cash-flow requirements.
“AirAsia is navigating its recovery phase exceptionally well as key operational metrics improved in December compared with September,” it added.