Asian shares rise, but bigger falls expected today. Malaysia Airlines "fully valued", Qantas "hold"
Virgin Blue gave up 5.3%, after a strong rally in the past couple of weeks, while Malaysia Airlines (MAS) fell 3.6% as its move to drop domestic fuel surcharges met with a cool response from investors. HWANGDBS Vickers maintains its "fully valued" on MAS with a RM2 price target, while OSK Research reiterates a "neutral" rating with a RM3 price target. OSK Research stated MAS may continue to be on investors' radar screens, "given its impressive management track record and the swirling rumours which surfaced last month of a potential strategic alliance with Qantas".
Qantas shares rose 0.8% yesterday. ABN AMRO reiterated its "Hold" rating on the stock, updating its forecasts to include a lower oil price, but factoring in further capacity and yield reductions in the face of a tough second half. ABN AMRO forecasts a 1H09 profit of AUD222 million and prefers Qantas to Virgin Blue (Sell, AUD0.25 target price). The broker added, "the entry of Delta and V Australia on the trans-Pacific route should be challenging", and it has factored in yield declines as a result.
Overnight, US and European stock markets slumped by 3-5%, which could lead to some pressure on equity markets in Asia today.
Asia Pacific selected airlines daily share price movements (% change): 14-Jan-09