Tuesday, 24 April 2012

MAS gains 3% on falling oil prices

KUALA LUMPUR (April 24) : MALAYSIAN AIRLINE SYSTEM BHD [] (MAS) gained as much as 3.3% or four sen to RM1.27 in intraday trade against a backdrop of declining crude oil prices. The stock, however, traded lower at RM1.26 as at 3pm with some 477,000 shares done.

The investment fraternity has a cautious sentiment on MAS’ outlook. In a note, OSK Research Sdn Bhd analyst Ahmad Maghfur Usman said crucial concerns for MAS include its capital commitments against costlier jet fuel and sluggish air travel demand.

“We see the increasing likelihood for the national-flagged carrier to call for another round of a rights issue as its credit facility dries up. Furthermore, there are risks that its collaborative framework with AirAsia could be called off due to strong resistance from its unionised workforce.

“If this does happen, MAS will be negatively impacted over the longer run as more headwinds are expected from the intensification of competition ahead of the Open Sky Policy,” Ahmad Maghfur said. OSK maintains its “sell” call and target price of 90 sen for MAS.

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