MAS (SELL)
Competition and High Jet Fuel
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New entry of Malindo Airways into Malaysia market by May 2012 is likely to heighten yield pricing competition pressure on MAS (which is currently defending against AirAsia).
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In the near term, MAS is likely to suffer from weak air travel, and compete intensely with the other FSCs and LCCs.
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Any turnaround on international air travel and cargo demand, will be depending on the success of China’s stimulus program, in boosting global trade volumes.
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Potential new leadership of Maseu, likely to have a tougher stance, which may pose further challenge to the execution of MAS business turnaround plan.
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Jet fuel price has recovered back to US$135/bbl, eroding MAS’s margins.
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Maintained SELL recommendation with lower target price of RM0.88 (from RM0.92).
Source: Hong Leong Investment Bank Research - 21 Sep 2012
Ammar Roshidy
Cannot agree. year end market is profitabel. Flights are also fully booked for Nov and Dec peroid.
2012-10-02 10:45