Wednesday, May 23, 2012

Malaysian Airline System: Upgrade to Hold - 1Q12: Losses, as expected

Slight improvement, more needed. MYR357m (+5.9% YoY, -54.5%) core net loss was within our MYR332m loss forecast, but below consensus. The impact of 13% higher jet fuel price YoY, a soft yield environment and on-going business restructuring costs made it a very challenging quarter for MAS. There was some disclosure on its funding plans, which should provide adequate capital for at least 1.5-2.0 years, by our estimate. We upgrade MAS to a Hold as the share price is close to our revised TP of MYR0.97 (-3%) post results housekeeping, pegged to 10x 2013 PER, which is the mid-level valuation of the aviation cycle.

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Source: Maybank Research - 23 May 2012

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