Original Article: http://eohkis.com/invest/airasia-5099-kl-updates-how-high-can-it-go/

When I wrote about AirAsia less than a month ago, its stock was just recovering from its 52-week low.  At that time, I was down 30% on my AirAsia purchase. Now, in less than a month, I have not only recovered my losses, but also making a 9% unrealised gain after my purchase in late July.

The question is: is it still a value buy? Yes, many investors are buying AirAsia again, and here's why:

Net Tangible Asset (NTA) Yet Again

In my previous article, I wrote about AirAsia's NTA, which is currently holding at 1.71 MYR. Since the last quarterly report, we are probably two months away from the next earning announcement.  Even if we assume the worst for this quarter, it would need quarterly losses larger than that in late 2014, its biggest quarterly loss since 2008 crisis,  to bring its NTA down to its current price: 1.36 MYR. The fact is, such loss is unlikely. It would literally need a crisis to bring AirAsia's NTA down to 1.36 MYR.

Fuel Cost at 5-Year Low

Since my last update, crude oil price has recovered a little from its 52-week low (38.51 USD/bbl). If we look at its trend for the last 5 years, oil price is hovering at its 5-year low:

Even though oil price is showing signs of recovery, analysts still think that its price can go even lower. With the consistently low oil price, we can expect AirAsia to continue to benefits from this, at least for the coming months.

EOHKIS Sentiment: Hold

If you have read my previous article, you would know that NTA and fuel cost were also my strongest argument to buy. At this price point, it may still a value buy, but not as good as a month ago. If you have bought any AirAsia share since its 52-week low, it would be best to hold on to it for a long term. AirAsia is a value stock and a profit machine (it has only posted one quarterly loss since 2008). The expect value from future earnings would most likely outweigh current capital gains. Essentially, you have bought a share of money-making business with only half the price. I am not considering selling until its price has surpassed its NTA.

If you didn't get to buy at its low, you should really consider its short-term volatility: many would want to lock in their profit at this point, thus may drive the price down a little in near future.

Disclosure: The author has a long position in AIRASIA(5099.KL). This article is purely opinions of the author, whom should not be considered a professional financial advisor by any means. Please trade/invest at your own risk.  

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