Research houses 'buy' calls on MAS

Four research houses have issued reports on national carrier, Malaysia Airline System Bhd (MAS), and issued 'buy' calls with price targets ranging from 90 sen to RM1.

The research houses said the calls were based on MAS' bright outlook and the drastic reduction in its losses to RM432.6 million from RM2.2 billion previously for financial year 2012.

OSK Research said it continued to remain upbeat on MAS future outlook backed by effective non-fuel cost management and positive returns from route rationalisation as management engages the right fleet for the right route to better utilise its fleet.

"Another factor is its new aircraft with lower maintenance costs and lower fuel consumption that will boost operating margin," it said.

It has maintained its target price (TP) for MAS at RM1.

TA Securities has projected MAS to record a higher net profit of RM73 million and RM241 million from RM28.6 million and RM142.4 million previously for financial year 2013 (FY13) and FY14.

"This is mainly driven by higher unit revenue assumptions of 26.4
sen/revenue-passenger per km (RPK) and 26.9 sen/RPK for FY13 and FY14, respectively," it said.

With a potential upside of 22.4 per cent, TA Securities has set a TP at 90 sen.

Maybank IB Research said MAS would grow modestly this year, with a net reduction of six aircraft this year.

"This fleet rejuvenation exercise will bring down its average fleet age to seven years, which is similar to industry leaders such as Singapore Airlines and Emirates," it said.

It said MAS management has said this year's outlook would remain challenging and yields soft.

"Regional sectors like Asean, China and India are performing better relative to long-haul routes, and this is where MAS will focus its growth strategy," it said.

Maybank IB has maintained its TP at 97 sen.

KAF-Seagroatt and Campbell Securities Sdn Bhd said it remained cautious on the intensifying competition from low-cost carriers amid the global uncertainty.

"However, MAS has shown vast improvements in its operating statistics and we now see a possible turnaround with the group's latest business revamp initiatives," it said.

The research house has set a TP at RM1.-- Bernama