Brokers have mixed views on Thai Airways
Some brokers suggest that investors avoid a "trading buy" of Thai Airways International stock, fearing a hiccup in the national carrier's long-term business plan. However, others say it's the right time to buy.
An analyst at Maybank Kim Eng Securities (Thailand) said yesterday that the brokerage was recommending against a trading buy on THAI stocks after its board of directors approved the dismissal of president Piyasvasti Amranand. Investors should wait until there is a clear picture on whether the airline will proceed with its long-term strategy of a Bt6-billion cost reduction and new aircraft procurement.
These policies will have an impact on the airline’s financial forecast. Under these assumptions, the brokerage projected that the airline would enhance net profit by Bt2 billion this year, contributing to the house’s projection of total net profit of Bt5 billion.
“We suggest that investors should avoid trading buys of THAI stocks in the short term until the long-term plan is clear,” the analyst said.
Meanwhile, an analyst at Finansia Syrus Securities said it had suggested an “accumulated buy” of THAI shares in case of long-term investments, as the price of THAI stock has risen in response to rumours of Piyasvasti’s dismissal.
“We recommend a ‘buy’ rating on THAI stock for long-term investments. The stock’s book value is around Bt31 each. We expect that the airline’s financial results will recover significantly,” the analyst said.
Phillip Securities (Thailand) reiterated in its recent research that the brokerage has maintained its revenue target for THAI this year at Bt4.93 billion. Meanwhile, THAI’s new budget airline Thai Smile, which will begin service in July, will help support the national carrier. In addition, THAI’s hedging on fuel prices at 86 per cent in the third quarter and 80 per cent in the fourth will help its cost management if the world oil price does not drop below US$107 a barrel.
For the second quarter this year, the brokerage has maintained its views on THAI, saying it will post a net loss after the low season, but at a lower pace of losses. Cabin factor in April rose to 78.1 per cent, up from 71.8 per cent a year earlier. Bookings were also better, showing 73 per cent in June, up from 62 per cent year on year, and 55 per cent in May, up from 48 per cent.
