ASEAN KEY DESTINATIONS
Has Garuda turned it around?
Indonesia’s national flagship carrier Garuda Indonesia posted its biggest one-day gain since the stock made its debut in February, after reporting profit in July that erased its first-half loss and put it in the black for the year to date.
Still, some analysts were skeptical about the advance, saying that Garuda needs to maintain profitability to assure investors of the justification in its share price.
Garuda rose 8.9 percent to Rp 490 at Thursday’s close on the Indonesia Stock Exchange. Almost 70,000 shares changed hands with a total value of Rp 16.75 billion (US$1.96 million).
The company said that it posted Rp 320 billion in profit for July alone, wiping out a first-half loss of Rp 185 billion, citing a drop in fuel prices, an increase in passenger volume and more efficient flight schedules.
Some analysts said that they found it difficult to believe that Garuda could wipe out half a year’s losses in one month, purely on the back of increased passengers and efficiency.
“I don’t believe the numbers until I see audited third-quarter results. Generating Rp 320 billion on operation and efficiency alone is not enough, unless Garuda sold several of its classic planes,” said Bertrand Reynaldi, head researcher at eTrading Securities.
Edwin Sebayang, head researcher at MNC Securities, was surprised with Garuda’s achievement, saying that it was impossible that operation and efficiency boosted profit by that much in a single month. “This has aroused suspicion from analysts and investors,” he said.
Still, Elisa Lumbantoruan, Garuda’s financial director, insisted the gains were accurate.
“Production increased, load factor increased, yield per seat increased, fuel prices dropped and we have become more efficient because we started using our new aircraft,” he said.
Some analysts said that they were expecting Garuda’s shares to trade at the Rp 500 to Rp 550 level by the end of this year.
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