Malaysian Airlines (MAS)’s 1QCY13 operating stats improved significantly, with  the  overall  load  factor  growing  by  310bps  y-o-y.  Its  annualized 1QCY13  operating  stats  for  passengers  slightly  exceeded  our  forecast, reaffirming our view that MAS’ turnaround may materialize. Maintain BUY, with our FV unchanged at MYR1.00 (ex-rights FV: MYR0.50).

Strong  numbers  as  expected.  MAS’ 1QCY13 operating stats improved, as its overall load factor increased by 310bps y-o-y to 74.0% (vs 70.9% in 1QCY12). During the quarter, its international load factor grew 390bps y-o-y  while its domestic load factor rose by a decent 90bps y-o-y. On a q-o-q basis,  total  revenue  passenger  kilometres  (RPK)  climbed  1.1%  q-o-q, which implies strong growth as its 1Q is traditionally weaker than 4Q. This positive  set  of  numbers  reaffirms  our view that MAS’ restructuring efforts could potentially bear fruit.

Oneworld’s  positive  effect.  We  continue  to  believe  that  the  oneworld alliance  could  help  increase  the company’s  passenger  feed.  As  shown  in Table 3, the RPK of its international flights in 1QCY13 expanded by 17.2% YTD. We think that its passenger growth momentum could be sustained as our  market  sources  revealed  that  the  load  factor  for  MAS’  international flights continues to be encouraging.

Slightly  above  expectations.  On  an  annualized  basis  (see  Table  1 below),  MAS’  1QCY13’s passengers RPK and available  seat  kilometres (ASK)  slightly  exceeded  our  forecasts,  although  its  load  factor  fell  slightly below  our  expectation.  While  its  cargo's  load  tonne  kilometres  (LTK)  and capacity  tonne  kilometres  (CTK)  were  still  below  our  expectations,  these could be offset by a strong recovery in passenger traffic. All in, we remain optimistic that MAS’ turnaround could potentially materialize.

Source: RHB