AirAsia soars early Friday on strong Q1 earnings

KUALA LUMPUR: AirAsia’s share price soared  to an early high of RM2.29 on Friday after it reported a stunning turnaround in its first quarter ended March 31 with  analysts upgrading the low-cost carrier’s target price.

At 9.33am, it was trading at RM2.28, up 16 sen. There were 26.75 million shares done at prices ranging from RM2.22 to RM2.29.

Its call warrants, AirAsia-C33 added 2.5 sen to 19.5 sen.

The FBM KLCI was up 1.85 points or 0.11% to 1,632.94. Turnover was 245.77 million shares valued at RM149.77mil.  There were 181 gainers, 213 losers  and 224 counters unchanged.

Also higher were AirAsia X and its warrants. The shares rose 0.5 sen to 39.5 sen and the warrants one sen to 28.5 sen. 

AirAsia posted an almost six-fold increase in its earnings in Q1, FY16 to RM877.8mil, mainly due to higher revenue and lower fuel prices.

The surge in its net profit was due to a 31% increase in revenue to RM1.7bil, as well as a 29% drop in the average fuel price to US$56 from US$79 per barrel a year ago.

CIMB Equities Research is retaining its target price of RM3.13 for AirAsia after a stunning 1Q16 group core net profit of RM429mil (US$106mil), which was at the higher end of its RM350mil to RM450mil preview and a turnaround from losses last year.

At RM3.13, this was 47.6% above the last traded price of RM2.12, the research house said on Friday. The target price was based on CY17 price-to-earnings (P/E) of eight times (peer range of six to 12 times).