Stock Name: AIRASIA
Company Name: AIRASIA BHD
AirAsia Bhd
(July 19, RM3.55)
Maintain buy with target price of RM4: AirAsia group passenger volumes jumped 21% year-on-year (the highest in the region) to 2.45 million in June with all three markets showing strong growth. Measured by return per passenger kilometre, Indonesia and Thailand grew passenger volumes by 35% to 40% while the core Malaysian business also grew 16.8% y-o-y. On a month-on-month comparison Indonesia and Malaysia were both strong while Thailand saw some seasonal weakness.
Passenger load factors also improved 1.3 percentage points (pps) m-o-m (2.4pps y-o-y) to 80% for the group. While the Malaysian and Indonesian operations witnessed an increase in load factors Thailand load factors declined from 79% to 73% which appears to be a combination of seasonality and the impact of the political situation ahead of elections.
Thailand and Indonesia associates now account for almost 40% of all passengers flying AirAsia, and with plans for the Philippines and Singapore expected to take off by end-2011 AirAsia appears fully geared to the Asean growth story. Both the Thailand and Indonesian associates turned profitable in 2010 and have since grown passenger volumes by 26% y-o-y while improving load factors.
Strong operating statistics reinforce our 'buy' call on AirAsia with a target price of RM4. At eight times FY12 earnings the stock still looks reasonably valued for 43% FY12 earnings growth and 23% return on equity. Load heavy strategy (higher discounts) and higher fuel prices may however result in some pressure on margins in the short term, however higher ancillary income and fuel surcharges should help in mitigating the impact going forward. ' CLSA Asia-Pacific, July 19
This article appeared in The Edge Financial Daily, July 20, 2011.
Company Name: AIRASIA BHD
| Research House: CLSA | Price Call: BUY | Target Price: 4.00 |
AirAsia Bhd
(July 19, RM3.55)
Maintain buy with target price of RM4: AirAsia group passenger volumes jumped 21% year-on-year (the highest in the region) to 2.45 million in June with all three markets showing strong growth. Measured by return per passenger kilometre, Indonesia and Thailand grew passenger volumes by 35% to 40% while the core Malaysian business also grew 16.8% y-o-y. On a month-on-month comparison Indonesia and Malaysia were both strong while Thailand saw some seasonal weakness.
Passenger load factors also improved 1.3 percentage points (pps) m-o-m (2.4pps y-o-y) to 80% for the group. While the Malaysian and Indonesian operations witnessed an increase in load factors Thailand load factors declined from 79% to 73% which appears to be a combination of seasonality and the impact of the political situation ahead of elections.
Thailand and Indonesia associates now account for almost 40% of all passengers flying AirAsia, and with plans for the Philippines and Singapore expected to take off by end-2011 AirAsia appears fully geared to the Asean growth story. Both the Thailand and Indonesian associates turned profitable in 2010 and have since grown passenger volumes by 26% y-o-y while improving load factors.
Strong operating statistics reinforce our 'buy' call on AirAsia with a target price of RM4. At eight times FY12 earnings the stock still looks reasonably valued for 43% FY12 earnings growth and 23% return on equity. Load heavy strategy (higher discounts) and higher fuel prices may however result in some pressure on margins in the short term, however higher ancillary income and fuel surcharges should help in mitigating the impact going forward. ' CLSA Asia-Pacific, July 19
This article appeared in The Edge Financial Daily, July 20, 2011.
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