KUALA LUMPUR, March 28 — RHB Research Institute has maintained a “buy” recommendation on AirAsia X Bhd with a target price of 53 sen, following the company's valuation being undemanding given its stronger year-on-year earnings growth.
In its note, the research firm said it is positive on AirAsia X's plans to realign routes from Australia to its other more profitable key markets in North Asia and India.
“This should allow the company to sustain more consistent quarterly earnings going forward.
“The company’s plans to add capacity and replicate routes from its associates in Thailand and Indonesia to markets in North Asia (where its Malaysian operations currently operates in). This, should also allow the company to optimise route network, and provide greater economies of scale, while sustaining its low cost structure," it added.
RHB Research said key catalysts for the stock include stronger-than-expected sequential quarter-on-quarter (QoQ) earnings, and a turnaround at its Indonesian operations.
It added key risks to its call would be patchy quarterly earnings (1Q and 2Q tend to be seasonally weak quarters and hence may generate losses), volatile jet fuel prices and regulatory changes resulting in higher cost of operations.
As at 10.17am, AirAsia X’s share was flat at 38 sen with 4.50 million units transacted. — Bernama
