Analysts upbeat on MAS

KUALA LUMPUR: Analysts from several research houses are upbeat with national carrier Malaysia Airlines' (MAS) fourth quarter results and have issued "buy" calls on the airline, with target prices ranging from 90 sen to RM1.

The calls were made by TA Securities Holdings Bhd, OSK Research Sdn Bhd and Maybank Investment Bank Bhd (Maybank IB).

MAS' fourth quarter performance is in line with the research houses' expectations and they believe that it has a bright outlook.

The airline has posted a net profit of RM51.4 million for the fourth quarter, reversing a RM1.3 billion loss registered in the same period a year ago. It is its second consecutive quarterly profit and its best quarterly results in nearly two years.

On Bursa Malaysia yesterday, MAS' share price fell two sen to close at 71 sen each.

TA Securities said in a research report yesterday that it is now projecting MAS to record a higher net profit of RM73 million and RM241 million, from RM28.6 million and RM142.4 million for financial years 2013 and 2014.

"This is mainly driven by higher unit revenue assumptions of 26.4 sen per RPK (Revenue Passenger Kilometre) and 26.9 sen per (26.1 sen per RPK and 26.5 sen per RPK previously) RPK for FY13 and FY14 respectively," it said.

TA Securities' earnings revisions are premised on better efficiencies with the usage of new aircraft and improvement in load factor and yields after the airline joined the oneworld alliance on February 1.

Its target price for the airline is at 90 sen.

Meanwhile, OSK Research said although MAS' 2012 Ebitda of RM18.5 million was below what it expected, the number is still encouraging and the research house remains optimistic that the airline's operational performance will improve in the upcoming quarters.

MAS is poised for a turnaround as unit costs have been consistently improving in the past few quarters, it said in its research note.

The research house has upgraded its target price on MAS to RM1 from 81 sen.

However, Maybank IB has a lower target price of 97 sen from RM1.02 after tweaking the average fuel cost consumption to US$126 per barrel from US$125.

The research house said MAS has managed to stem losses since its third-quarter financial year ended 2012 and has appeared to "turn the corner in terms of a successful business turnaround".

Meanwhile, MIDF Research has maintained a "neutral" on MAS with a lower target price of 78 sen from RM1.02, due to its earnings dilution from right issue impacts.