KUALA LUMPUR, Feb 19 — Malaysian Airline System Bhd's (MAS) share price saw negative movement, while emerging the most active stock this morning, following disappointing financial year 2013 (FY13) results.

As of 11am, the share was down 4.5 per cent or 1.5 sen to 29.5 sen, with 85.48 million changing hands.

For the financial year ended December 31, 2013, the airline's pre-tax loss more than doubled to RM1.15 billion, from RM424.8 million in the same period of 2012.

Revenue, however, rose to RM15.12 billion from the RM13.75 billion previously.

Research houses are in consensus that the financial result was well below expectations and yield pressures will continue to persist in the current financial year.

Kenanga Research said the MAS management's target of 12 per cent capacity growth this year is unlikely to happen, due to among other factors, intensive competition from low cost and regional carriers.

“MAS has to further drive its unit cost down and maximise revenue through ancillary income at the same time,” it said in a research note today.

Kenanga Research said following the disappointing FY13 results, it has further widened the core net loss projection in financial year 2014 (FY14) by 65 per cent to RM558.6 million.

The research house said the forecast was made as it raised MAS' operating cost projection higher by 1.5 per cent in FY14, after factoring in a higher fuel cost in tandem with its capacity increase.

Alliance Research in a separate note said despite expecting stronger tourist arrivals this year, MAS has to continue to keep fares low as it attempts to fill up the additional seats and retain load factor at above 80 per cent.

“In light of the sticky cost structure, we are wary that MAS may see its operating margin decline further, should the group cut fare in order to stimulate demand,” it added.

The research house said unlike low cost carriers, MAS lacked the ability to generate additional revenue via ancillary income, making the business turnaround via a “load active, yield passive” strategy, challenging.

It added that the commencement of klia2 on May 2 could also further intensify competition in the domestic airline industry.

Alliance Research has also tweaked MAS' FY14 and FY15 earnings forecast downward by 1.4 per cent and 1.5 per cent respectively.

Meanwhile, RHB Research in another note said MAS is expected to face a tough time trying to significantly beef up overall profitability.

It has forecast the FY14 and FY15 yields to decline by five per cent and one per cent respectively, while estimating net losses of RM761.2 million and RM456 million.

Kenanga Research and RHB Research has revised downward, the call on MAS to “underperform” and “sell” from “market perform” and “neutral”.

Both research houses cut their target price, with Kenanga Research reducing it to 27 sen from 32 sen and RHB Research to 20 sen from 30 sen previously.

Alliance Research, however, maintained a “sell” call on MAS with an unchanged target price of 23 sen. — Bernama