AirAsia to double
AirAsia to soar 100%-200%. Phoenix RISING
When many people talk about airline stocks, there will be the usual grumbling and negative comments. But do you know that airline stocks are the perfect anti-oil instrument in this current cycle?
Oil and fossil fuel is dying, making way for renewable energy. Unlike previous cycles, oil will not recover. That's because technology for renewables have reached an inflexion point when it's actually cheap and feasible to use renewables. This will be great for airline stocks (you would know if you have been tracking global airline stocks).
Anyway, back to airlines and AirAsia.
1) AirAsia : Most lagging Airline stock in the WORLD
Do you know that global airline stocks are rallied 200-300-400% in the last 2-3 years??
Southwest Air's share price in the US tripled from 10.62 in 2014 to 42.34 now! Delta Air also nearly tripled from 12.65 to 48!
What about AirAsia? AirAsia's share price actually went down 27%! Think it's fair to say that it's time for AirAsia to catch up! A double, or triple maybe. ;)
Anyone who say that Airlines is a not so good business should look at the charts above as proof that airlines is a good business for this cycle. The current economic cycle of low oil prices is a blessing for non-oil logistics as well as tourism travel stocks ie Airlines.
2) AirAsia is super cheap now : only 4.7x PE!
AirAsia is forecasted by HLG Research to make RM822m core profit or 29 sen core EPS for 2016. This means it's only trading at 4.7x 2016 PE. Serious?!
Ryanair and Southwest trades at 13x and 12x PE. This means AirAsia is only 60% cheaper than it's contemporaries. It's ridicilous because AirAsia is a world famous brand and is the strongest proxy to South East Asia. It should trade at least at the SAME valuations as these two stocks ie at least 12-13x. This would mean a potential 150% upside from here.
3) AirAsia profits trending upwards and Higher in 2016-17
Oil and Jet fuel prices have been lower recently, plus AirAsia's hedges will be lower which means much lower fuel costs for coming quarters and higher profits. Plus it has already kitchen sunked it's losses in Indonesia and Philippines, which means a clear financial path for 2016.
All in all, AirAsia's profits will boom higher in 2016 which will make it even cheaper. Pegging a 13x PE fair valuation AirAsia should be trading at above RM3.50 in 1-2 years time.
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Discussions
5 people like this. Showing 29 of 29 comments
Paperplane said Good article & Icon8888 likes this article. Wow, they are at same wave now.
2016-03-02 01:34
Dear HebePower,
U r at right timing call for AIRASIA. THX.
If not for the plane crash on Dec 28th 2014, Airasia would have flied high just like Delta Airlines.
Could move back to 2.40 then around 3 but must always be above 152.
Pls never re-visit 152 n below again.
Only risk is, mgmt must come clean with increasing profits n stop whatever hedging shits.
Another tailwind : OIL is expected to plunge again after the oil countries agree to maintain production vol. This agreement would not last long. they will 'fight' among themselves always.
And Oil price to stay low for extended time.
2016-03-02 02:12
.
1 USD drop in jet fuel price = RM 25,000,000 in cost saving for AirAsia
Average fuel price...
88 in 2015...
Say 65...60.. 55... in 2016
Cost saving = extra profit...
(88-65) × 25,000,000 = RM 575,000,000
(88-60) × 25,000,000 = RM 700,000,000
(88-55) × 25,000,000 = RM 825,000,000
AirAsia is a popular brand... and a leader.. while other airlines prices have tripled... just doesn't make sense that it stays a 10 lagger...
DOESN'T MAKE SENSE FOR AIRASIA TO STAY 10 LAGGER!!!
DOESN'T MAKE SENSE FOR AIRASIA TO STAY 10 LAGGER!!!
DOESN'T MAKE SENSE FOR AIRASIA TO STAY 10 LAGGER!!!
.
2016-03-02 07:54
Before the forex losses and plane crash, AA share price is hovering around RM2.90. CIMB said if the oil price stay low for an extending period of time, they will give a price target of RM6. Then shit happened....dropped to 80 cents.
I would say easily RM6-8 in 3 years.
Next quarter, possible for resume paying out dividend.
2016-03-02 08:40
"technology for renewables have reached an inflexion point when it's actually cheap and feasible to use renewables."
Not yet, but soon.
2016-03-02 08:50
If you tell me they going to soar before the quarter result came out, maybe, just maybe, I would have believe in you.
2016-03-02 09:08
AH PLANE...
How many FREE ticket to oversea u got already from AIRASIA???? You get how many stewardess (more interested to know) liao.
2016-03-02 13:02
Even free tickets,it still can make from other services like food,beverages,hotel accomodations.
2016-03-02 13:11
I totally disagree with you that TP is only rm3.50. and I also totally disagree with HL research that earning will be around rm0.39. I can assured you that AA earning will be around RM1 and deduct 40% as margin of safety, I still get RM0.60. 0.60 x 10 (PE) = RM6.00. Remember I told u so.
2016-03-02 13:40
If more tourists come here,then its business will expand which will absorbs higher cost.
2016-03-02 22:29
thank you choy shun TONY FERNANDES, AFTER BJCORP-C CHOY SUN VT, I SAID AIRASIA ANOTHER CHOY SUN LOH.
Now, next one will be BORNOIL!
CHOY SHUN LAU........
2016-03-03 13:14
AA already hedge oil at USD55. dont think we will see oil jump to USD55 anytime soon.
2016-03-03 17:19
I prefer the Delta Airlines to anyone who wants to fly in the air. I travel last week when I planned to travel from New York to Los Angeles. I used the Delta Airlines Customer Service Phone Number +1-855-396-2377 to book the Delta Airlines Tickets and I got the professionals and satisfied services from the customer service team. I suggest to all if anyone planned to travel in the air check in the Delta Airlines Flights and make your journey memorable. To get the more information about Delta Airlines to visit the website.
https://www.emailcustomersupportnumber.com/delta-airline.php
2018-09-11 03:02
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I dun think the renewable energy is the reason to keep oil price down at this moment
2016-03-02 00:21