Fall in Qantas Airways and Santos Limited

Qantas Airways Limited

Industry: Transportation
 
QAN Details

• Dip in consumer confidence and soft performance: Qantas Airways Limited (ASX: QAN) reported that its Revenue per Available Seat Kilometer (RASK) fell during the month of March 2016 due to decline in yield performance for domestic as well as international businesses. The group reported that the traffic performance during the peak Easter and school holiday period for March was not as per expectations. The group’s capacity (Available Seat Kilometers) rose 7% for the March 2016 while Group demand (Revenue Passenger Kilometers) surged 5.5% leading to a Group revenue seat factor of 78%, which is a decrease by 1.1 percentage points as compared to the same month of last year. Accordingly, the stock fell over 10.8% on April 18, 2016. QAN has cut a planned expansion of domestic capacity given drop in consumer confidence and the upcoming federal election. The group has downgraded guidance for domestic capacity growth for 2H16 from 2% to 0.5%-1%.
• Recommendation: We believe that the stock is “Expensive” at the current price of $3.62

 

Qantas March Performance (Source: Company Reports)
 

Santos Ltd

Industry: Energy


STO Dividend Details

• Falling oil prices pressurized the stock: Santos Ltd (ASX: STO) stock fell over 6.9% on April 18, 2016 given the falling oil prices as the outcome of much awaited Doha meeting failed as major oil producers did not reach an agreement to freeze production.
• Recommendation: We remain bullish on STO given the positive drilling results by the group, strong asset base and pipeline prospects, and view the recent correction as a short term pressure. We maintain our “BUY” stance on STO at the current price of $3.88

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