By Sharina Ahmad
AIRLINE stocks on Bursa Malaysia might be in for a turbulent time as concern over the impact of China’s deadly coronavirus outbreak unnerves global markets.
AirAsia Group Bhd’s share price dropped 3.85% to RM1.56 while its long-haul sister AirAsia X Bhd dropped 10% to 14 sen as trading resumed after the midday break on Jan 28.
Share price movements of both the airline companies mirrored the airline stocks across the region. Business publication CNBC on Jan 28 reported that South Korea’s Korean Air Lines plummeted 6.69% while Australia’s Qantas Airways fell 5.22%. Also, Singapore’s Singapore Airlines declined 2.95% and Japan Airlines slipped 0.38%.
On Jan 24, MIDF Research said in a note that barring no coronavirus outbreak in Malaysia, tourists from India could offset the potential decline in arrivals from China.
Investors can “take a position on any weakness given how turnaround occurred during pandemics in the past,” said MIDF Research’s Adam Mohamed Rahim, who has maintained a buy call on airport operator Malaysia Airports Holdings Bhd with a target price of RM8.98.
“We had observed an uptick in valuation three months after the peak of the severe acute respiratory syndrome (SARS) outbreak in 2003, where its share price rebounded +31.0%,” he added.
When the SARS outbreak peaked in 2003, MAHB’s passenger traffic growth in Malaysia took a breather that year to drop by just less than 1.5% year-on-year (yoy) to 33.5 million, said Adam.
Total international passengers at KLIA Main Terminal travelling to and from China declined by less than 10.7% yoy during the same period. But, recovery was fast and passenger traffic at MAHB’s Malaysian airports rebounded more than 17.8% yoy in 2004, added Adam.
AirAsia recently extended the suspension of all flights to Wuhan, China until Feb 15. In a statement, the low-cost carrier said passengers affected by the move can obtain either a full refund or a credit account. – Jan 28, 2020
