PETALING JAYA: AirAsia Bhd’s share price rose to its highest in more than 2½ years to RM1.75, its intraday high yesterday, on strong buying interest buoyed by a strong set of second-quarter results released on Wednesday.

Its share price had appreciated 25.36% so far this year, out-performing the stock market’s benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index, which gained 9.41% in the same period.

AirAsia closed up 5 sen, or 2.98%, at RM1.73 after trading between its intraday high and a low RM1.70. It was also the sixth most actively-traded counter on Bursa Malaysia with a volume of 20 million shares.

Bloomberg quoted AirAsia group CEO Datuk Seri Tony Fernandes as saying the company was still studying whether to start paying dividends for the first time since its listing in 2004 after recording its sixth consecutive quarterly profit.

“That’s a big step forward for us,” he said, adding that AirAsia was on course to list its units in Thailand and Indonesia in the first half of next year.

On Wednesday, the carrier announced that it made a net profit of RM198.9mil for the three months to June 30, a 43% jumped from RM139.2mil in the previous corresponding period, on turnover of RM940.6mil.

AirAsia’s core-operating profit for the period was RM168.5mil, a 31% increase from RM128.4mil previously. Its core-operating profit margin for the period was at 17.9%, 0.7 percentage point higher than the 17.2% achieved a year ago.

The strong set of results came largely within analysts’ expectations and some brokerages have raised their share price target for AirAsia.

OSK Research expects AirAsia to continue to post strong numbers going forward. “With the second half being the stronger half as forward bookings are higher than last year, we expect the carrier to meet our earnings before interest, tax, depreciation and amortisation forecast of RM1.35bil for the financial year ending Dec 31 (FY10) (from RM1.3bil in FY09), although we expect new plane deliveries to result in higher depreciation,” it said.

The research house also raised AirAsia’s core pre-tax profit for FY10 by 15% and FY11 by 28% as it has revised downwards its interest costs for FY10 and FY11 by 14% and 10% respectively due to the stengthening of the ringgit and interest charges collected from its associates.

OSK also raised AirAsia’s 2011 revenue target by 4% as it tweaked it allocation for the effective planes based in Malaysia from 53 to 55.

“AirAsia’s second-quarter financial results came in above our expectations due to lower-than-expected interest expenses,” ECM Libra said in a report yesterday.

The improvement in its revenue indicated a recovery in demand for air travel, it said, adding: “This led to an increase in adjusted net profit of 27% year-on-year to RM164.6mil, bringing year-to-date total to RM271.6mil. This hits 55% of our FY10 estimates of RM492m.”

Looking ahead, it expects “demand recovery to accelerate.”

Meanwhile, Kenanga Research said AirAsia’s first six months core net profit of RM272mil came slightly above its expectations and within consensus at 56% and 47% respectively. “The FY10 outlook is stable with more good news coming up,” it said.

“The strong rebound in the second quarter and positive outlook for its earnings, coupled by positive news flow, prompted us to ascribe higher price earnings ratio to 10 times which is still at a discount to its peers,” it said.