KUALA LUMPUR (Feb 29): Shares of AirAsia Bhd rose as high as 5.75% this morning, after the low-cost carrier reported a return to the black with a net profit of RM554.2 million in the fourth quarter of financial year 2015 (4QFY15).
At 10.38 am, the stock rose as high as 8 sen to RM1.47, before paring gains and settling at RM1.44. A total of 27.03 million shares were traded, making it the fourth most actively-traded stock on the local bourse.
AirAsia shares had dipped to a five year low on Aug 28 last year to 87 sen, after news emerged its long-haul arm AirAsia X Bhd announced that its internal and external auditors had discovered 24 payments, totalling RM7.01 million, were made for “fictitious services” between 2010 and 2014 to a service provider.
AirAsia had lodged a police report over the matter. The stock has risen 65.5% since.
Last Friday (Feb 26), AirAsia announced it returned to the black with a net profit of RM554.2 million or 19.9 sen per share in its fourth quarter ended Dec 31, 2015 (4QFY15), compared with a net loss RM428.51 million or 15.4 sen loss per share a year ago, on higher revenue and a 21% reduction in the average fuel price from US$95 per barrel in 4QFY14 to US$75 per barrel in 4QFY15.
Revenue grew 47% to RM2.17 billion, from RM1.48 billion in 4QFY14, supported by a 10% growth in passenger volume; while the average fare was up 4% at RM177, compared with RM171 achieved in 4Q14.
The airline posted revenue per available seat kilometre (RASK) of 22.29 sen in 4QFY15, up 40% year-on-year (y-o-y), while ancillary income per passenger increased 4% to RM49, close to its near term target of RM50. The seat load factor was at 85%, which was 7 percentage points higher than the same period last year.
For FY15, AirAsia’s net profit grew more than six-fold to RM540.96 million, from RM82.8 million in FY14; while revenue came in at RM6.3 billion in FY15, up 16.3% from RM5.4 billion the previous year.
In a note today, MIDF Research said AirAsia’s results were above house and consensus’ expectation, representing 120% of financial year 2015 (FY15) forecasts respectively, due to higher-than-expected capacity growth and load factor.
The research firm noted that Malaysia’s AirAsia operational profit rose 2.5 fold on the back of 5% year on year (y-o-y) capacity growth, resulting in a load factor of 85%, which was the highest in two calendar years, since 4QFY13.
MIDF Research also said average fares and ancillary revenue per pax rose 4% y-o-y, with the former benefiting from better competitor pricing and the latter from better product offering.
Its Philippines operations saw a substantial narrowing of losses by 91% to US$2.5 million (RM10.57 million), benefiting from capacity growth, load factor and average fares due to its Boracay (Kalibo) hub gaining from an influx of Chinese tourists, the note read.
However, its Thailand and Indonesian operations continued to struggle, with Thailand AirAsia reporting a 32% y-o-y drop in net income to US$15 million (RM63.42 million) and Indonesian operational losses widening nine-fold to US$79 million (RM334.01 million), following a right-sizing of operations to focus on international routes.
MIDF Research said it was increasing its financial year 2016 and 2017 (FY16 and FY17) forecast earnings by 7% and 2% respectively, following the better-than-expected capacity growth and load factors in 4QFY15, which has pushed up its capacity growth assumptions and load factor forecast.
The research firm maintained its “Buy” call on the stock, with a higher target price (TP).
“As a result, our TP is raised to RM1.94, based on unchanged price to earnings ratio (PER) of 8.5 times FY16 earnings per share EPS,” the note read.
“We like AirAsia, as it is a beneficiary of lower jet fuel prices, with lower hedges in FY16 of US$59 per barrel (FY15: US$88 per barrel),” it added.
