KUALA LUMPUR: Affin Hwang Research has maintained its Buy call on AirAsia with a target price of RM3.55 based on an unchanged 12 times 2015E EPS.
"We raise AirAsia’s 2015-16E earnings by 9%-13% in view of lower jet fuel price assumptions.
"The benefit to AirAsia is mitigated by a potential cut in fuel surcharges. No change in our average fare and RM/US$ assumptions. We remain positive on the outlook," it said in a note on Monday.
In view of the continuing weakness in global crude oil prices, it has recently lowered its in-house average Brent crude oil assumptions further to US$55/bbl (from US$75/bbl previously) for 2015E and to US$65/bbl for 2016E.
Therefore the research house has revised our jet fuel cost assumption for AirAsia to US$81/bbl for 2015E and to US$85/bbl for 2016E while maintaining an average refining margin assumption of US$20/bbl.
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