MAS (SELL) - Competition and High Jet Fuel

Date: 
2012-09-21
Firm: 
HLG
Stock: 
Price Target: 
0.88
Price Call: 
SELL
Last Price: 
0.00
Upside/Downside: 
+0.88 (∞%)

MAS (SELL)

Competition and High Jet Fuel

  • 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).
  • In the near term, MAS is likely to suffer from weak air travel, and compete intensely with the other FSCs and LCCs.
  • 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.
  • Potential new leadership of Maseu, likely to have a tougher stance, which may pose further challenge to the execution of MAS business turnaround plan.
  • Jet fuel price has recovered back to US$135/bbl, eroding MAS’s margins.
  • Maintained SELL recommendation with lower target price of RM0.88 (from RM0.92).

Source: Hong Leong Investment Bank Research - 21 Sep 2012

Discussions
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Ammar Roshidy

Cannot agree. year end market is profitabel. Flights are also fully booked for Nov and Dec peroid.

2012-10-02 10:45

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