ECM Libra Investment Research maintained its "Buy" call on AirAsia Bhd (5099, and revised upwards its target price after the budget carrier posted strong second quarter financial results, driven by increased passenger volume, ancillary income and higher flight frequencies.
The research house also expects a better second half for AirAsia, mainly helped by higher traffic in conjunction with the festive seasons.
"Backed by its stellar first-half results, we have upgraded our forecasts and target price to RM2.32 (+39 per cent from RM1.67) based on 11 times average peers' current year 2010-11 earnings per share (EPS).
"Strong second quarter results for group and associates. We believe the valuation range is undemanding given AirAsia's strong growth prospects. However, the valuation peg of 11 times PE is low compared to other low-cost carriers like Ryanair, easyJet, JetBlue and Tiger Airways," said ECM Libra.
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