Malaysia Airlines (MAS) drastically reduce its losses in FY12, posting a reported net loss of RM432.6m vs a net loss of RM2.2bn in FY11. Both the reported and core net loss were in line with our and street estimates. Effective costs management, stabilizing fuel price and fuel consumption efficiency by its new aircraft, lower capacity due to route rationalization and improved operating stats were among the factors that brought MAS back on track. Maintain BUY, at a higher revised FV of RM1.00, with 9.0x FY14f adjusted EV/EBITDAR.
FY12 results spot on. MAS’ FY12 reported net loss of RM432.6m and adjusted core net loss of RM748.2m was spot on with our estimates and in line with consensus’ numbers. The group’s bottomline was largely buoyed by interest income totaling RM53.6m (+70.0% y-o-y), which we believe may be interest earned from channeling RM1.5bn cash from its Sukuks to fixed deposits or other short-term investments. Although its FY12 EBITDA of RM18.5m was below what we expected, the number is still encouraging and we remain optimistic that MAS’ operational performance will improve in the upcoming quarters. This is because the cash raised from its Sukuks will eventually be utilized to renew its fleet to achieve efficiency and achieve a net positive effect. On a y-o-y basis, the national carrier’s 4Q non-fuel costs shrank 33%, a sign that its cost management efforts are bearing fruit.