KUALA LUMPUR (Feb 14): CIMB IB Research has maintained its “Reduce” rating on AirAsia Group Bhd (AAGB) at RM3.12 with a lower target price of RM1.82 (from RM2.12) and said it raises AAGB’s FY19-20F core EPS by lowering oil price assumptions but keep its Reduce call as higher airport charges from mid-2019F may hurt demand.

In a note Feb 13, the research house said its base case is for oil prices to trend higher in FY20F due to slower US production growth and stronger demand for middle distillates post IMO 2020.

“Our target price of RM1.82 is based on CY20F P/E of 10x and adding our expected special dividend of 19 sen arising from the Castlelake transaction,” it said.