Domestic travel to help support AirAsia earnings

KUALA LUMPUR: MIDF research has slashed earnings estimates for AirAsia Group Bhd in light of the Malaysian government's decision to implement a movement control order from March 18 to 31, 2020.

"Following the revision in our earnings estimates, we revised our target price to RM0.63 per share (from RM1.03 previously).

"Our revised target price is derived via pegging our FY21F EPS of 7.4sen to a target PER of 8.5x which is the lower end of the aviation cycle," it said.

The research house maintained its neutral outlook on the counter, which was last traded on March 16 at 70 sen per share.

A further decline in international passenger traffic is to be expected amid travel restrictions for outbound travel for local and inbound travel for foreigners over the coming two weeks.

For March 2020, MIDF research anticipates the drop in total passenger traffic at the airports to reach more than 30% year-on-year. The research house lowered its total passengers carried forecast for klia2 in FY20 by about 19%.

However, domestic flights will continue to operate according to airlines schedule as airports will remain open during the period.

MIDF added that the stimulus package announced by the government, which covers domestic tourism, will partially support domestic travel.

The research house said it is possible for AirAsia to redeploy its aircraft for domestic routes especially during festive seasons such as Hari Raya Aidilfitri, provided that the Covid-19 fears have waned by then.

It added that domestic travel in Malaysia could be a cushion for the additional pressure on the group from travel bans in countries such as India.
Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 18
Cxense type: free
User access status: 3


Did you find this article insightful?


38% readers found this article insightful

Next In Business News

Malaysia Airlines offers subsidised tickets to boost domestic tourism
O&M business drives Serba Dinamik profits higher in Q3�
Top Glove confirms temporary stoppage of production plants in Klang due to Covid-19�
Soybeans touch 4-1/2 year high of $12 on supply concerns, high demand
Ringgit closes higher vs US$ at 4.0880
CPO futures close higher at RM3,518
Boustead Plantations stages turnaround in 3Q with RM17.9m net profit
US dollar falls to 2018 lows as vaccine optimism damps haven demand
HLT Global posts lower Q3 profit, as operating cost jumps�
PRG returns to black in 3Q with RM19mil net profit

Stories You'll Enjoy