Quick take: AAX down 5.7% after net loss widens

  • Stock on the Move
  • Thursday, 14 Nov 2019

KUALA LUMPUR: Shares in AirAsia X Bhd’s (AAX) shed more than 5.7% in early morning trading on Thursday, after the carrier announced that it had sunk deeper into the red for its third quarter.

The the long-haul budget airline fell 5.71%, or one sen to 16.5 sen with 10.03 million shares traded.

AAX net loss for the third quarter ended Sept 30,2019 widened to RM229.89mil from RM197.47mil a year ago, due to higher taxation, finance costs and foreign exchange losses.

Its revenue also fell 6.4% to RM1.01bil compared with RM1.08bil previously.

Passenger load factor improved by one percentage point on-year to 81% despite an increase in fleet size.

For the nine-month period, the carrier’s net loss also widened to RM393.67mil from RM213.43mil in the same period last year, while revenue decreased 6.4% to RM3.2bil from RM3.42bil.

On prospects for 4QFY19, the airline expects overall core results to remain reasonably healthier operationally year-on-year as the management remains committed to ensure sustainable growth amid challenges in the global aviation industry.

Affin Hwang Capital Research said AAX reported another disappointing set of results –3Q19 core net loss of RM142mil was below the street and its expectations.

The poor results were due to weaker operating profit (stiff competitions and lower aircraft utilisation, partly cushioned by lower fuel cost), accounting impact from the adoption of MFRS16 and high taxation.

“We cut our 2019-21E EPS to reflect the challenging market conditions, as seen by AAX’s weak operational statistics.

“Downgrade to sell (from hold) with a lower target price of 10 sen (from 16 sen), based on 2.5x 2020E BVPS.Looking ahead, we expect AAX to report losses in 2019-21E; the weak results should put pressure on its share price, ” Affin said.

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