AirAsia X, AirAsia down in very active trade

AirAsia could be in focus after its founders denied news of privatisation.

KUALA LUMPUR: Long-haul budget carrier AirAsia X (AAX) and Air Asia slipped in early Wednesday trade as investors took profit after the announcement of AAX results.

At 9.45am, the KLCI was down 1.61 points or 0.1% to 1,681.46. Turnover was 347.65 million shares valued at RM157.37mil. There were 171 gainers, 201 losers and 261 counters unchanged.

AAX fell 4.5 sen to 41.5 sen with 81.7 million shares done while its call warrants also fell, with CU down two sen to 10 sen, CW lost four sen to 9.5 sen and CV 3.5 sen to 11 sen. Its warrants fell three sen to 25.5 sen.

AirAsia lost 15 sen to RM3.07 with 10.35 million shares done. It is due to announce its second quarter results likely on Wednesday.

CIMB Equities Research said while AAX did very well, it had its Reduce call on concerns about the competitive environment. It raised the target price from 17 sen to 21 sen – a sharp difference from Tuesday’s closing price of 46 sen.

It said the higher target price was after the earnings per share upgrades, still based on one time CY price-to-book value of.

It said AAX did very well during 2Q16, delivering essentially breakeven results in one of its seasonally-weakest quarters, which was not totally unexpected after its strong 1Q.

“AAX outperformed our very modest profit forecasts for the company, which is why we have raised our EPS estimates by more than 100% for FY16-17. The results were achieved on the back of the Malaysian Airlines Bhd (MAS) capacity cuts, but we wonder if AAX will be able to deliver the same strength in 2H, now that MAS is cutting fares,” CIMB Research.

Affin Hwang Capital Research downgraded AirAsia X from Buy to Hold after the share price rally recently.