KUALA LUMPUR: Malaysia Airlines (MAS) faces an uphill task in returning to the black after having only twice reported quarterly core profits in the past three years, OSK Research said in a research note today.
In relation to this, OSK trimmed its earnings estimates again in view of recent poor results which have yet to reflect significant improvements via cost cuts.
OSK expects MAS to remain in the red next year and has ascribed a lower fair value of RM0.96 an retained its "sell" call.
"MAS' teleconference yesterday did not provide significant positive developments to warrant a rerating of the stock as there were renewed concerns from the investment community over a potential cash call in view of its high cash burn rate amid a weak global outlook," OSK said.
MAS' cash flow from operations was again lower for the quarter, as the airline racked up a bigger deficit of RM516 million versus RM279 million in the preceding quarter, with its net gearing at 162 per cent, the note said.
OSK also said MAS has not secured any financing for 2012 for the delivery of its aircraft to bridge its pre-delivery payments.
"Management has reassured that a cash call is unlikely as its pre-delivery payment will be refundable upon securing financing which should suffice to meet working capital requirements.
"Management has guided for 2012 capital expenditure of about RM5.0 billion to RM6.0 billion," OSK said. It added that MAS will unveil more details of its upcoming collaboration with AirAsia, which should cover the areas of maintenance, overhaul and repair, joint procurement, training and ground handling. - BERNAMA
In relation to this, OSK trimmed its earnings estimates again in view of recent poor results which have yet to reflect significant improvements via cost cuts.
OSK expects MAS to remain in the red next year and has ascribed a lower fair value of RM0.96 an retained its "sell" call.
"MAS' teleconference yesterday did not provide significant positive developments to warrant a rerating of the stock as there were renewed concerns from the investment community over a potential cash call in view of its high cash burn rate amid a weak global outlook," OSK said.
MAS' cash flow from operations was again lower for the quarter, as the airline racked up a bigger deficit of RM516 million versus RM279 million in the preceding quarter, with its net gearing at 162 per cent, the note said.
OSK also said MAS has not secured any financing for 2012 for the delivery of its aircraft to bridge its pre-delivery payments.
"Management has reassured that a cash call is unlikely as its pre-delivery payment will be refundable upon securing financing which should suffice to meet working capital requirements.
"Management has guided for 2012 capital expenditure of about RM5.0 billion to RM6.0 billion," OSK said. It added that MAS will unveil more details of its upcoming collaboration with AirAsia, which should cover the areas of maintenance, overhaul and repair, joint procurement, training and ground handling. - BERNAMA
