MAS shares at record low on concern about future

Analysts say the MH370 incident will negatively impact earnings in 2014.

PETALING JAYA: Shares of Malaysia Airlines (MAS) fell the most since 1998 amid bankruptcy concerns and that the Government may allow the flag carrier to fail.

The shares dipped to a record low of 15 sen in early trade yesterday on heavy volume.

The counter fell 3.5 sen, or 18.42%, to close at 15.5 sen as the most active counter with 412.2 million shares traded. Year-to-date, MAS share price has fallen some 50%.

“Investors are just concerned about the future of MAS, following a strong message from the Government that the carrier may be allowed to fail,” an analyst said, adding that MAS was currently trading at its cheapest valuation in at least 10 years.

Analysts said there were no new developments on MAS apart from market talk that a group of businessmen were interested in buying it over. However, details are limited at the moment.

Last week, Prime Minister Datuk Seri Najib Tun Razak was quoted as saying that it was too late to save the airline in its current form. He said bankruptcy might be among several options.

Earlier, Tourism and Culture Minister Datuk Seri Nazri Aziz was quoted as saying that MAS would not be given any more financial support by the Government.

The Gulf News in Dubai had quoted Nazri as saying that the Government did not want to put “any more money” into the airline after the missing flight MH370 incident. “To inject new capital is certainly not an option,” he had said.

In the first quarter ended March 31, MAS posted a wider net loss of RM443.9mil on a revenue of RM3.6bil. This is also its biggest net loss in over two years and its fifth consecutive quarter of losses.

Analysts said the latest quarterly financial results added some urgency to talks that the loss-making airline might need a financial booster from parent Khazanah Nasional Bhd.

They said it would be an uphill battle for MAS to turn around this year following the MH370 incident which has marred its brand image considerably while facing stiff competition.

Analysts opined that the MH370 incident would negatively impact earnings in 2014.

According to data compiled by Bloomberg, analysts are projecting losses through 2016, and MAS has been trading near its lowest since 2001 relative to its assets.

There are reports of MAS spinning off its units, as many of them are profitable. If these were to be listed, significant value could be unlocked for shareholders.