By MIDF Research
Target Price: RM1.60
WITH the recent approval to AirAsia X’s (AAX) 49%-owned associate Thai AirAsia X from Thailand’s aviation regulator to commence operation, MIDF Research said it expects shorter gestation period and some initial start-up losses with its local brand awareness and focus on matured service routes.
The next step, it said, would be application for operating permit and slots for its intended service routes.
Maintaining a “buy” rating, the research house added that due to weaker ringgit, it revised upwards its assumption of fuel bill and lowered the long-haul arm of Asia’s biggest budget carrier (AirAsia Bhd) financial year 2014 (FY14) to FY15 earnings forecasts by 10% to 11% respectively.
Thai AirAsia X will launch the operation with two leased Airbus A330-300s with 377 seats from the Don Muang airport. Basically, the rational of setting up another regional hub is to leverage the short-haul connectivity as provided by its short-haul arm, Thai AirAsia.
MIDF Research revised the target price of RM1.45 from RM1.60, due to lower earnings per share projection for FY14-FY15, premised on FY14 price-earnings ratio of 12 times which is the average of AAX global peers.
By HwangDBS Vickers Research
Target Price: RM5.54
WHILE Pos Malaysia has gained 124% in 18 months as the market priced in the national postal company’s robust earnings outlook and business synergies with DRB-Hicom, HwangDBS Vickers Research has reduced the upside to its standard operating procedure-based target price, leading to the stock being downgraded to “hold.”
Going forward, there could be pressure on earnings due to staff and transportation costs. The bank-backed research house estimated that they accounted for 61% and 12% of total operating expenditure respectively.
Based on its sensitivity analysis, a 5% hike in staff costs would reduce earnings before interest and tax (EBIT) by 7% and a 5% hike in transportation costs would reduce EBIT by 3%.
To offset the cost pressures, it said the group needed to see a larger pick-up in courier and non-postal revenues.
Courier earnings expanded at 56% compounded annual growth rate over the last three years. Although non-postal operations (Ar-Rahnu and shared banking services) contributed only 21% of revenues currently, HwangDBS Vickers expected stronger growth ahead.
Targeting at 16 times calendar year 2014 earnings per share, it said this was is on par with global peers’ at 15 to 17 times.
By RHB Research
Fair value: RM2.25
ALAM Maritim’s wholly-owned subsidiary Alam Maritim (M) Sdn Bhd has been awarded an extension worth RM58.8mil on its contract to provide an accommodation barge with ExxonMobil Exploration & Production Malaysia Inc. Maintaining a “buy” rating with an unchanged fair value of RM2.25 based on a target of financial year 2014 (FY14) price-to-earnings ratio (P/E) of 14 times, RHB Research noted the the 12-month extension, which took effect on Feb 1, would carry no changes to the oil and gas (O&G) service provider’s FY14-FY15 earnings forecasts as the extension has been reflected in the numbers.
The bank-backed research house had imputed an average fleet utilisation rate of around 82% throughout FY14/15 and does not expect any vessel to be idle for more than two months as the demand for offshore support vessels remained buoyant.
It expected to post a good set of full-year FY13 results as its fleet utilisation rate remained high at around 90% in second half of financial year 2013.