Aviation-related stocks soar on positive outlook

Aviation-related stocks soar on positive outlook
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KUALA LUMPUR (Jan 26): Aviation-related stocks soared at mid-morning today, as positive re-ratings and expected earnings growth propped up the counters.

AirAsia X Bhd, which was one of the most actively traded stocks at 11.50 am with 5.20 million shares crossed, rose 0.5 sen to 40 sen, before paring gains to trade unchanged at 39.5 sen.

Meanwhile, AirAsia Bhd was up by 2 sen at RM2.51, with as many as 2.22 million shares traded.

Airport operator Malaysian Airports Holdings Bhd (MAHB) also trended upwards, gaining as much as 5 sen to reach RM6.26, with 1.37 million shares traded.

CIMB Research upgraded MAHB to “add”, citing multiple catalysts to MAHB’s passenger growth such as strong capacity growth in local airlines and a robust inflow of Chinese tourists.

“We think there is a strong likelihood that the Malaysian (airport landing) charges will also be increased,” CIMB said in a report yesterday, referring to a hint by MAVCOM during an analyst briefing last October, that it may approve a hike in the landing charges in 2018.

MAHB’s negotiation for a 35-year contract extension with the Ministry of Finance to 2069, which is a possible upside to its valuation, is also not reflected in its current share price, said CIMB analyst Raymond Yap.

Meanwhile, AirAsia X was rated as having possible further upside, despite hovering at a sideway channel for the past five months, according to Public IB Research.

The research house said in a technical note today that the stock was poised for a breakout from its descending triangle, with its bullish relative strength and MACD indicators signalling reasonable entry level.

“However, failure to hold at support level of 37.5 sen may indicate weakness in the share price and hence, a cut-loss signal,” Public IB said.

On Tuesday, AirAsia and its long-haul affiliate AirAsia X both reported higher numbers of passengers carried in the fourth quarter ended Dec 31, 2016 (4QFY16).