Beaten down AirAsia offers buying opportunity

REUTERS pic

KUALA LUMPUR: AirAsia Bhd’s shares, which tumbled some 14% in the past two days, has opened a window of opportunity for investors to buy, according to Maybank Investment Bank Research.
 
“We view the share price correction as overly severe and unjustified. But, it also means a buy opportunity has emerged for those who missed out in the last round. 
 
“At current share price, AirAsia’s PER and EV/Ebitdar are the second cheapest globally and are also well below their historical averages. Buy,” Maybank said. 
 
AirAsia shares tumbled by 14% in the past two days as investors take caution as many airlines have reported weak 1Q17 results. 
 
Nonetheless, Maybank believes AirAsia’s 1Q17 profits (to be released after market close today) would not disappoint as the short-haul market remains strong.
 
“We estimate a core net profit of RM360mil, the lower year-on-year profit is expected as 2016 was an exceptional year. 
 
“Valuations have turned attractive; AirAsia is the second cheapest low cost carrier globally. Buy with a target price of RM3.75, based on unchanged 10x 2017 PER,” Maybank said.