Stock Analysis: AIRASIA 5099 as of date 13th Nov 2016 (UTC+8:00)

- - - created on 13th Dec 2016 (UTC+8:00) - - -

AIRASIA 5099 BUY, SELL, or HOLD?

STRENGTHS

Lead by a capable leader, Tony Fernando with great mindset
A company need a great management team. And a great management team need a capable leader. I believe Tony Fernando who been ranked as one of the most influential people in the world (see link), can continue to bring AirAsia to next level.

Being largest Low Cost Carrier Asia for 13 years
No matter what are the risks that I am sharing below, do not forget that AirAsia has been a Low Cost Carrier in Asia for more than 10 years. This business preposition will not be easily replaced by others, especially with a great leader as Tony Fernando. Nevertheless, Tony definitely will have to come out with a greater plan and direction to keep their advantage in market in the future.

RISKS 

MARS will rise as local competitor
Malaysia Airlines (MARS) has experienced a serious crisis back in year 2014 caused them delisted from Bursa Malaysia Main Board and undergo restructuring. This year 2016, you able to start seeing news from MARS, where they start to gain market share (see link). I believe soon, AirAsia market share will be diluted by MARS. Even not soon, but definitely will.

America Airline will be potential global competitor
Warren Buffet, which is well know as the god of investment has recently invested in America Airline, which are American Airlines, Delta Airlines, and United Continential Holding Inc (see link). This will give a great boost to airline business and dilute AirAsia's market share in West. People might think, well, AirAsia is strong in Low Cost Carrier, not a direct competitor. But do not forget, now America has their own oil producing capability, which will give a great advantage to their native airline business, as the fuel is the most important operating cost. This means America Airlines will able to provide great services with more competitve price to their customers.

Airasia earning will be affected by petrol price hike
Tony Fernando himself did said that fuel is the most important operating cost to airline business. As the OPEC and many non-OPEC players are starting to cut down their production amount, the oil price has the trend of increasing (see link). This will definitely affect the earning margin of AirAsia in near future.


RECOMMANDATION

Short & Medium Term Investor
Overall, I find that AirAsia is still a great potential stock, just that, by looking at the current market, I believe RM 3.00 is the top it can goes now. So to maximize your profit, my recommandation will be sell it and enter again when the opportunity come. 

• For those who bought, sell it at RM 2.80 if possible. Otherwise, sell it if the price drop below RM 2.30.
• For those who yet to bought, do not buy right now.  

Long Term Investor
If you bought AirAsia at the price below RM 1.50, keep holding it because I believe it is hard to have the chance to invest again at that great price. 

• For those who bought, hold it.
• For those who yet to bought, buy it at the price not higher than RM 2.50.

My defination of Short, Medium, and Long term investor as below.

• Short Term: 3 years and below
• Medium Term: 3 to 6 years 
• Long Term: 6 years and above

Please be reminded that above is just a recommandation, digested the info and make your own decision. Good Luck!