Stock Name: AIRASIA
Company Name: AIRASIA BHD
Research House: ECMLIBRA
AirAsia Bhd
(Feb 14, RM2.72)
Maintain buy at RM2.69 with target price of RM3.50: AirAsia announced last Friday that it will defer the deliveries of 10 A320 aircraft originally scheduled for 2012 to 2015. With the deferment, AirAsia will receive 14 instead of 24 aircraft in 2012, and the number of deliveries in 2015 will be increased from 9 to 19 planes. AirAsia will not bear any penalties from the deferment.
According to AirAsia, the decision to defer the deliveries in 2012 was made to allow the group to switch from its order of the classic Airbus A320s to a newer variant, the A320 NEO (New Engine Option), which is designed to reduce fuel consumption by 8% to 15%. AirAsia has agreed to a firm order of 175 Airbus A320s to be delivered between December 2005 and October 2014. So far, the group has taken delivery of 16 A320 in 2010 and is looking at eight more this year. Most of these will be deployed in Thailand and Indonesia, in order to grow the associates' fleet size in line with their increase in flight frequency and the addition of new routes. The 14 planes expected in 2012 will be mainly for its joint ventures in the Philippines and Vietnam.
Based on our assumptions, we expect the change of delivery schedule to increase FY12 earnings per share (EPS) by 6.2% as a result of lower depreciation and finance cost, after accounting for lower aircraft lease income. Meanwhile, net gearing is expected to decline by 5% to 1.5 times. At the moment, we keep our FY12 forecasts unchanged until further guidance from management during its 4Q results briefing. The group is expected to release its 4QFY10 results on Feb 24. We maintain a 'buy' recommendation on AirAsia with a target price of RM3.50 based on 10 times FY11 EPS. ' ECM Libra Investment Research, Feb 14
This article appeared in The Edge Financial Daily, February 16, 2011.
Company Name: AIRASIA BHD
Research House: ECMLIBRA
AirAsia Bhd
(Feb 14, RM2.72)
Maintain buy at RM2.69 with target price of RM3.50: AirAsia announced last Friday that it will defer the deliveries of 10 A320 aircraft originally scheduled for 2012 to 2015. With the deferment, AirAsia will receive 14 instead of 24 aircraft in 2012, and the number of deliveries in 2015 will be increased from 9 to 19 planes. AirAsia will not bear any penalties from the deferment.
According to AirAsia, the decision to defer the deliveries in 2012 was made to allow the group to switch from its order of the classic Airbus A320s to a newer variant, the A320 NEO (New Engine Option), which is designed to reduce fuel consumption by 8% to 15%. AirAsia has agreed to a firm order of 175 Airbus A320s to be delivered between December 2005 and October 2014. So far, the group has taken delivery of 16 A320 in 2010 and is looking at eight more this year. Most of these will be deployed in Thailand and Indonesia, in order to grow the associates' fleet size in line with their increase in flight frequency and the addition of new routes. The 14 planes expected in 2012 will be mainly for its joint ventures in the Philippines and Vietnam.
Based on our assumptions, we expect the change of delivery schedule to increase FY12 earnings per share (EPS) by 6.2% as a result of lower depreciation and finance cost, after accounting for lower aircraft lease income. Meanwhile, net gearing is expected to decline by 5% to 1.5 times. At the moment, we keep our FY12 forecasts unchanged until further guidance from management during its 4Q results briefing. The group is expected to release its 4QFY10 results on Feb 24. We maintain a 'buy' recommendation on AirAsia with a target price of RM3.50 based on 10 times FY11 EPS. ' ECM Libra Investment Research, Feb 14
This article appeared in The Edge Financial Daily, February 16, 2011.
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