AIRASIA BHD
HLIB Research expects AirAsia to remain on a growth trajectory from the strong capacity expansion, high load factors and low jet fuel costs.
It said the group’s near term catalysts included asset monetisation exercises, and the listing of its joint ventures or associates in 2H17 and 2018 will further enhance its valuation.
The research house kept its forecasts unchanged and maintained its “buy” call on the counter with a higher target price.
It noted that AirAsia has guided for continued strong load factor for the group in 2H17 based on current forward bookings.
Yield is expected to sustain into 2H17 in view of strong demand for air travel.
The group has also increased fuel hedging to 82% of its 2H17 requirement at US$60 per bbl.
“AirAsia will undergo internal reorganisation exercise, in order to streamline the group structure and achieve a leaner corporate structure for better supervision and facilitate corporate exercises,” it said.
It expected the exercise to be completed by the first quarter of 2018.
The group reported Q2’17 core earnings of RM315.7mil, bringing 1H17 earnings to RM667.6mil, which was 43.2% of HLIB Research’s FY17 forecast.
“We deem the result in line as we expect stronger earnings in 2H17 due to seasonality stronger demand factor,” the research house said in a note.
Year to date, core earnings fell by 8.0%, dragged by weaker contribution from its joint ventures and associates.