AirAsia X

[winston]

not vested

5238 AAX (BUY)
Key focus on sustaining operations

AAX reported a weak start to 1QFY26, with core PATMI at RM62.6m (after consolidating Capital A Aviation).

Earnings were significantly impacted by:
(i) a decline in ancillary income (c.RM100m);
(ii) higher marketing expenses (c.RM100m); and
(iii) an increase in jet fuel costs c.RM200m.

Nevertheless, air travel demand across the Asia Pacific region remains resilient.

AAX continues to actively manage ticket pricing (including fuel surcharges), as well as fleet capacity to mitigate the impact of elevated jet fuel cost.

We maintain our BUY recommendation, albeit with a lower TP of RM2.20 (from RM3.35), based on 10x FY27 earnings.

At the current share price of RM1.22, valuations remain attractive.

We do not expect the war to be a prolonged one and believe AAX is capable of avoiding a PN17 classification.

Source: HLIB