KUALA LUMPUR: Low cost carrier AirAsia Bhd's continuous efforts in offering new digital offerings is seen as a positive move ahead as the airline’s digital reinvention would ensure the company remains relevant in the highly competitive industry.
Analysts have raised their optimism on the low-cost carrier’s prospect, remaining positive on earnings and digital offerings, coupled with stable demand and new areas of growth in India and Japan.
"Hence, we are maintaining our ‘buy’ recommendation," MIDF Research said in a note, with target price of RM4.02 and a possible earnings revision in its financial year earnings release next month.
AirAsia Bhd’s operating performance increased 17 per cent YoY to 10.44 million carried passengers in Q4 2017.
The improvement in-line with the 16 per cent increase in seat capacity, while the load factor improved by one percentage point to 88 per cent compared the same period in 2016.
Total fleet size grew to 116 aircraft, comprising 84 in Malaysia (AirAsia Bhd), 15 in Indonesia (PT Indonesia AirAsia) and 17 operating in Philippines (Philippines AirAsia Inc).
For the full-year 2017, AirAsia said the group carried a total of 39.1 million passengers, an increase of 11 per cent YoY.
While the stronger ringgit continue to be positive for AirAsia, crude oil price would weaken current level and potential future corporate exercise, Public Investment Bank said.
With that sentiment, PublicInvest reaffirmed 'Outperform' call on AirAsia, following the adjustment on foreign exchange assumptions of RM4.10/US$ from RM4.30/US$ previously for FY18 to FY19.
"This resulted in an increase in our earnings assumptions by an average of 18.3 per cent," the research house noted.
Public Invest has increased AirAsia’s target price to RM5.40 from RM3.69, ascribing a higher valuation of 10 times in FY18 earnings per share.