Sale of AirAsia’s AAC and special dividend on track

KUALA LUMPUR: CIMB Research said the sale of AirAsia Bhd's aircraft leasing unit Asia Aviation Capital Ltd (AAC) is moving towards completion and special dividends could be declared this year.

The research house said the final bids for AAC was due on March 27, followed by a 4-5 week evaluation period where AirAsia will pick the buyer.

A shareholder EGM will need to be called during 2Q17 forecast and the likelihood is for the sale of AAC to conclude within 2017F.

“We think that AAC can be valued as high as US$1.2bil, of which AirAsia will sell a 70% stake.

“If the entire proceeds are distributed, it will amount to a special dividend of RM1.12 per share based on an exchange rate of RM4.45,” CIMB said.

CIMB has maintained its “add” call on AirAsia with a higher target price of RM3.73

The research house said AirAsia’s 4Q16 core net profit of RM894mil was double its forecast due to large realised foreign exchange gains.

Excluding these items, AirAsia’s 4Q16 core net profit was RM430mil, 51% higher year-on-year and in line with CIMB’s previous forecast.

“While the demand outlook for 1Q17F continues to be robust, higher oil prices and
the weaker ringgit will impact FY17F core earnings, which we expect to fall 52% year-on-year,” CIMB said.

Additionally, it said competition was likely to remain intensify as moving into 2H17F.

“Malindo’s remarkable capacity expansion during 2016 and planned growth in 2017F mean that AirAsia will face more competition this year.

“AirAsia is also planning to expand its capacity by eight aircraft this year, after shrinking the fleet last year. With the weaker ringgit and higher oil price, we forecast AirAsia’s FY17F core EPS to fall 52%,” CIMB said.
Read more at http://www.thestar.com.my/business/business-news/2017/02/24/sale-of-airasia-aac-and-special-dividend-on-track/#wqI7JsrobpP6Rdcs.99

AirAsia 2016 net profit up 3.7 times; to ramp up fleet size, frequency this year

KUALA LUMPUR (Feb 23): AirAsia Bhd, which posted a 16% slide in fourth-quarter net profit, will grow its fleet size to over 200 aircraft this year as it continues to roll out new destinations in Asean, as well as boost its flight frequency on its "trunk" routes.

Trunk routes refer to high demand routes.

The budget airline will take delivery of 12 Airbus A320neos for its Malaysian operations this year.

"To increase the number of possible connections at our hub at klia2, we intend to increase to daily frequency up to 16 routes currently operated sub-daily, giving a boost to our Fly-Thru traffic," AirAsia group chief executive officer Tan Sri Tony Fernandes said in a statement today.

With all its four airlines in Malaysia, Thailand, Indonesia and the Philippines operationally profitable in 4QFY16, he said the airline will press forward with its expansion to combine the four operations under a single, listed Asean holding company.

"(As such,) we are urging Asean governments to relax ownership restrictions and consider Asean investors as equivalent to local investors," Fernandes added.

AirAsia saw its net profit drop 16% to RM465.32 million or 16.7 sen per share in the fourth quarter ended Dec 31, 2016 (4QFY16) from RM554.11 million or 19.9 sen per share a year ago, due to a 48% decline in aircraft operating lease income.

Quarterly revenue also fell 10.7% to RM1.94 billion from RM2.17 billion in 4QFY15.

In a filing with Bursa Malaysia today, AirAsia said passenger seat sales, however, increased in the current quarter under review, supported by a 5% growth in passenger volume while average fare was up 5% at RM186 from RM177 in 4QFY15.

Ancillary income per passenger, however, fell 4% year-on-year (y-o-y) to RM47 from RM49. The seat load factor was at 87% in 4QFY16, which was 2 percentage points higher than the same period last year.

For the full year FY16, however, the airline's net profit jumped 3.7 times to RM2.04 billion or 73.2 sen per share from RM541.19 million or 19.4 sen per share in FY15, while revenue grew 9.9% to RM6.92 billion from RM6.3 billion the previous year.

AirAsia said the increase in revenue was driven by a 9% growth in passenger volume in FY16, while capacity only increased by 1% y-o-y.

"Ancillary income per passenger increased by 2% to RM48 y-o-y and average fares were also up 6% to RM167 in FY16. The seat load factor was at 87% which was 6 percentage points higher than FY15," it added.

AirAsia's net debt amounted to RM8.8 billion as of Dec 31, 2016. Its gearing ratio fell to 1.3 times at the end of 4QFY16 from 2.29 times a year ago.

On its plans to monetise its leasing arm Asia Aviation Capital Ltd, Fernandes said it is at the due-diligence stage.

"We (also) continue to work towards an initial public offering for our crew training centre, AirAsia Aviation Centre of Excellence, and a dual listing for AirAsia Bhd in the Hong Kong or New York stock exchanges," he added.

Fernandes also pointed to the airline's expansion in India.

"We have plenty of growing to do (this year) even if we won’t start international flights until the second half of 2018. AirAsia India reports the highest aircraft utilisation rate among all short-haul airlines in the AirAsia Group, managing a 52% capacity increase in FY16, with the addition of just two aircraft from an initial fleet of six. Our focus remains on building our footprint and introducing our low fares to many more Indian cities," he said.

On AirAsia Japan Co Ltd, Fernandes said it is approaching a full launch soon. "Training flights as part of the regulator’s requirements took place in early-February and we are looking to open ticket sales from our Nagoya base soon. AirAsia Japan will end 2017 with a fleet of five aircraft,” he added.

On prospects, AirAsia said in Malaysia, the first quarter of 2017 is projected to achieve an average forecast load factor of 89% while for the remaining quarters of the year, it remains confident amid strong demand across most sectors coupled with a favorable fuel price environment despite continuous fare competition in the market. AirAsia’s Malaysian operations account for almost 60% of the airline’s total revenue.

"Barring any unforeseen circumstances, the directors remain positive for the prospects of the group in 2017," it said.

AirAsia shares closed down seven sen or 2.47% at RM2.76 today, bringing a market capitalisation of RM9.19

MBSB net profit at RM201.4mil in FY16


KUALA LUMPUR: Malaysia Building Society Bhd (MBSB) posted a net profit of RM45.6mil in the fourth quarter ended Dec 31, 2016, compared with a net loss of RM15.8mil in the same period a year ago.

The group’s pre-tax profit for the fourth of RM150.8mil increased by RM77.1mil as compared to the preceding quarter pre-tax profit of RM73.7mil. The increase was mainly due to lower allowances for impairment losses on loans, advances and financing and higher net operating income.

Its revenue, however, was lower at RM819.4mil in the fourth quarter against RM825.68mil previously.

MBSB board of directors has recommended a single-tier final dividend of 3.0% (3.0 sen net per ordinary share) for the financial year ended Dec 31, 2016.








The company said based on the share capital of 5.79 billion ordinary shares as at Feb 10, 2017, the single-tier final dividend payable would be approximately RM173.963mil.

For the full financial year ended Dec 31, 2016, MBSB posted a net profit of RM201.4mil, or 4.90 sen earnings per share, on revenue of RM3.27bil.

“We are pleased with the results considering the challenging economic environment last year that has dampened market sentiments. For MBSB, it was tougher but in anticipation of such prospects, we had treaded the year with caution and great prudence ensuring we are able to maintain business momentum as well as sustain profitability level.

“I believe we have accomplished that,” president and CEO Datuk Seri Ahmad Zaini Othman said in a statement.

Gross loans, advances and financing grew to RM35.28bil from RM34.11bill, a marginal increase of 3.45% or RM1.17bil.

On this, Ahmad Zaini said: “While we had strengthened market position in financing government contracts and projects especially the affordable housing, we are pleased to note that the new foray in SME segment continued to show promising results since the offer of equipment financing began two years ago.

“Revenue growth was four-fold from previous year, partly contributed by our new market presence in the northern and southern regions”.

MBSB’s retail financing assets remained the key contributor to its revenue with an asset composition between retail and corporate at 81:19 for year 2016 as compared with 85:15 in 2015.

Its net impaired financing/Loans ratio declined to 2.87% from 2.99% in 2015. Another positive indication also came from the financing/loans loss coverage ratio which had increased to 109.24% from 92.23%.

MBSB said in strengthening its liquidity position, the group had boosted investments in liquefiable assets achieving growth of RM1.37bil and as a result, contributing to the total income. Liquid assets stood at RM9.28bil as at Dec 31, 2016, rising by 17.33% as compared to RM7.9bil for the previous year.

The increased investment is in tandem with the net proceeds received from a rights issue of RM1.7bil completed in July 2016 which also increased the group’s leverage ratio to 14.38% as at Dec 31, 2016. To further support business expansion, the group had also accomplished in raising deposit level from RM28.58bil in 2015 to RM30.61bil as at Dec 31, 2016.

Commenting on its prospects, Ahmad Zaini said the heightened economic uncertainties and challenges leave us with no choice but to be resolute and optimistic.

“As it is, MBSB has developed and strengthened its capabilities in selected corporate segments that are well-linked and involved in the government projects, especially in the areas of education, infrastructure and now, the affordable housing. We are well supported by a qualified in-house technical team who monitors projects efficiently to identify and address project risks.

“Hence, MBSB hopes to benefit from the government’s efforts in continuing to roll out various construction and property projects to support the country’s economic growth,” he added.

Read more at http://www.thestar.com.my/business/business-news/2017/02/22/mbsb-net-profit-at-rm201-4mil-in-fy16/#cmcBHPS85srdAwK2.99

http://www.nasdaq.com/article/malaysias-eco-world-international-secures-epf-pnb-as-cornerstone-investors-20170220-00129

http://english.astroawani.com/business-videos/why-eco-world-international-ipo-so-good-143914

Eco World International, the overseas property arm of Eco World Development Group Berhad (EWD), seems to be off to a good start. EPF and PNB as cornerstone institutional investors, and the tripartite agreement between GuocoLand, EWD, and Tan Sri Liew Kee Sin now a done deal, and more, does this mean the EWI deal is a done and dusted deal? Listen to Ibrahim Sani and Luqman Hariz elaborate more on this.

KUALA LUMPUR: Affin Hwang Capital Research has reiterated its “buy” call on IOI Properties Group Bhd with a higher target price of RM3, based on a 40% discount to revalued net asset value (RNAV).


The research house also recommended shareholders to subscribe for the 1-for-4 rights issue at the price of RM1.38 given the attractive 35% discount to the current share price (ex-date on Feb 28).


“IOI Properties posted a 10% year-on-year increase in net profit to RM463mil in 1HFY17, which was above market and our expectations,” Affin said.


IOI Properties’ net profit of RM463mil in 1HFY17 comprises 58% of the consensus and Affin’s previous FY17 forecasts of RM794 to RM795mil.


It added that both the property development and investment segments saw a better performance.


IOI Properties achieved higher sales of RM795mil in 2QFY17 compared to RM730mil in 1QFY17.


“Sales are expected to remain strong in 2HFY17 as IOI Properties will launch the last phase of its Trilinq condominium project in Singapore.


“Unbilled sales of RM1.62bil as at end-2016 should sustain revenue going forward,” Affin said.


“We raise our EPS forecasts by 32-34% for FY17-19E to reflect higher sales and progress billings,” it added.


Affin has raised its RNAV/share estimate of IOI Properties to RM5 from RM4.81 previously assuming a higher revaluation surplus for its land bank.


“Based on the same 40% discount to RNAV, we raise our 12-month target price to RM3.00 from RM2.89. Maintain buy,” it said.

It noted that the risks to its call would be higher financing costs for its new land bank acquisition in Singapore and a prolonged downturn in the domestic property market
Read more at http://www.thestar.com.my/business/business-news/2017/02/22/affin-hwang-maintains-buy-on-ioi-properties-up-target-to-rm3/#HIii364tpJjZZh9V.99

DNeX shares march to nine-year high
By Neily Syafiqah Eusoff / theedgemarkets.com | February 21, 2017 : 11:14 AM MYT

KUALA LUMPUR (Feb 21): Shares of Dagang Nexchange Bhd (DNeX) continue to march higher this morning, hitting a high of 40.5 sen — the highest in nearly nine years.

The impressive jump in the company's profit added fuel to the share price rally. The stock opened at 40 sen, higher than yesterday's closing at 37.5 sen. Its trading volume swelled above 95 million shares in the first trading hour.

As at 11am, the stock retreated slightly from the day's high to 38 sen, up five sen or 1.33% from yesterday's closing, with 164.7 million shares changing hands.

In a bourse filing yesterday, DNeX reported that its net profit surged over eight times to RM30.62 million or 1.77 sen per share in the fourth quarter ended Dec 31, 2016 (4QFY16) from RM3.79 million or 0.49 sen per share a year ago, driven by the contribution from its 30%-owned associate Ping Petroleum Ltd.

Revenue more than doubled to RM67.31 million in 4QFY16 from RM27.91 million in 4QFY15.

The group also declared a second interim dividend of 0.5 sen per share, payable on Feb 28.

DNeX said the increased revenue was mainly contributed by partial revenue recognition on the Vehicle Entry Permit (VEP) and Road Charges (RC) contract of RM17.1 million, as well as revenue contribution from its newly acquired subsidiaries — OGPC Sdn Bhd and OGPC O&G Sdn Bhd.

"The recent success in securing two mini bids under the Petronas Carigali [Sdn Bhd] umbrella contract, by the group's directional drilling unit, has further opened up a new revenue stream to the group's energy business on top of the revenue from OGPC Group," it added.

Home / Business News


Islamic banking merger and acquisition plausible: AllianceDBS

Published on: Tuesday, February 21, 2017

Kuala Lumpur: A new wave of merger and acquisition (M&A) activities in the Islamic banking space is plausible, although the timing remains the key risk, says AllianceDBS Research.
Potential M&A candidates include the Malaysia Building Society Bhd (MBSB), and Bank Muamalat Malaysia Bhd (Muamalat), it said in a statement today.

AllianceDBS said MBSB was appealing because of its lucrative personal financing business and sizeable Islamic banking assets while the unlisted Muamalat potential was from a long awaited pare down in ownership by its largest shareholder, DRB-Hicom Bhd.

Albeit, indirect, it added Bursa was also a proxy to growth in Islamic banking as transactions on its commodity trading platform, Bursa Suq al-Sila (BSAS), were expected to increase in conjunction with Islamic financing growth.

The research house added domestic Islamic financing growth was expected to continue outpacing conventional loans growth, driven by regulatory push for internationalisation of Islamic finance.

"We expect domestic Islamic financing growth to continue outpacing conventional loans growth with a four-year compound annual growth rate of 12 per cent over financial year 2015 until 2020, opposed to two per cent for conventional loans," said AllianceDBS.

This, it said, was mainly underpinned by a growing push by banks to fulfil Bank Negara Malaysia's target of 40 per cent proportion of Islamic financing to total system loans.

AllianceDBS said there was hope for further growth pinned on the increase in financial inclusion for the industry through product innovation.

"Product innovation will be the game-changer.

"Given the knowledge and expertise acquired through actively pioneering initiatives and delivering solutions in the Islamic banking industry, Malaysia is indisputably making inroads to becoming the global hub for Islamic finance," it said.

The research house named the main Islamic banking proxy — the BIMB Holdings Bhd (BIMB) – as the largest Bursa-listed Shariah compliant financial institution with strong potential to lead product innovation.

"We like BIMB (holding company of Bank Islam) for its deep-rooted expertise in the industry, which we believe forms a strong competitive advantage as it positions them as a likely leader in product innovation.

"Maybank Islamic complements the Islamic banking scene for its size and established regional presence which will work to its advantage in competing on the global front," it added. –Bernama


http://www.dailyexpress.com.my/news.cfm?NewsID=115898

http://www.stuff.co.nz/motoring/news/89670568/Chinas-Geely-to-bid-for-Malaysian-car-maker-Proton

AirAsia upside move may persist, says RHB Retail Research

KUALA LUMPUR (Feb 22): RHB Retail Research said AirAsia Bhd’s upside move may persist after it continued holding above the rising 21-day SMA line.

In a trading stocks note today, the research house said as the 21-day SMA line has crossed above the 55-day SMA line recently, this is an indication of a positive sign.

“A bullish bias may appear at above the RM2.60 level, with an exit set below the RM2.35 threshold.

“To the upside, the immediate resistance level is anticipated at RM3.08. This is followed by the RM3.30 level,” it said.


By theedgemarkets.com / theedgemarkets.com | February 22, 2017 : 8:28 AM MYT

http://www.theedgemarkets.com/my/article/airasia-upside-move-may-persist-says-rhb-retail-research

air asia ,,, huat huat ,,,

ECOWORLD ... will fly high...

http://www.thestar.com.my/business/business-news/2017/02/20/cimb-research-retains-add-for-drb-hicom/

Eco World sets RM4 billion sales target for FY17

 January 24, 2017, Tuesday

KUCHING: Eco World Development Group Bhd (Eco World) has set an ambitious target of RM4 billion of property sales in financial year 2017 (FY17) ending October 2017.

Following a company briefing, AllianceDBS Research Sdn Bhd (AllianceDBS Research) believed the property developer is able to meet its sales target in FY17 given the overwhelming response for the group’s launches in FY15-FY16.

The research firm in a report yesterday said the group’s property sales in FY17 will be supported by 15 on-going projects and two new projects to be launched in FY17 namely Eco Forest at Semenyih, Selangor and Eco Horizon at Batu Kawan, Penang.

AllianceDBS Research opined that Eco World continued to bank on the group’s internal marketing and sales team to generate more sales riding on the group’s strong brand name and track record in property development.

Besides that, the research firm believed the company’s innovative township products will remain well-received in the market as the property developer’s townships continued to gain traction with more deliveries completed.

It gathered that there would be more than 4,700 units to be completed in FY17 which could help generate more interest from potential buyers

Besides, the research firm also opined that the company’s focus on township projects with gated-and-guarded strata-titled homes will offer healthy and sustainable long-term demand as the township project matures.

It added the property developer’s eco-friendly amenities and impressive landscaping features commonly found in the group’s townships will continue to attract overwhelming response for the properties.

In the meantime, AllianceDBS Research observed that Eco World has achieved RM3.8 billion of gross property sales in FY16, including sales from joint ventures or associate interest.

The research firm noted the amount was derived from the group’s Malaysian operation alone where 15 out of the 18 projects have been launched.

As compared with Eco World’s sales of RM3 billion in FY15, AllianceDBS Research said the property developer’s sales in FY16 grew by 26 per cent which was an impressive results given the weak sentiment for the property market.

As at end of October 2016, Eco World had RM4.9 billion in unbilled sales which will support the group’s earnings for the next three years.

Once the company’s projects go into full swing over the next few years, the townships can turn into self-sustaining developments which will generate even stronger interest among property buyers.

Eco World: EGMs to be held on Feb 20 instead. Eco World Development Group (EW) has revised the date of its two EGMs, called to decide on the proposed subscription of up to 27% in Eco World International (EWI) and the proposed acquisitions of two pieces of land in Penang, to Feb 20. In the original notices to Bursa Malaysia on Jan 31, EW had fixed Feb 14 for the EGMs to seek approvals for its unit Eco Horizon SB’s proposed purchase of 374.6 acres in South Seberang Prai for RM875.2m and its unit Eco World Capital (International) Ltd’s proposed subscription of up to RM777.6m worth of EWI shares in conjunction with EWI’s IPO. (StarBiz

Datuk Leong Kok Wah
Flagship: Eco World Development Group Bhd/Salcon Bhd
Net worth: RM1.392bil

The rise of Eco World Development Group Bhd has steered the affable Leong, who is better known as Eddy Leong in corporate circles, as among the top-40 richest businessmen in the country.

The year 2016 saw Leong indirectly increasing his stake in property development company Eco World. A private company where he is a shareholder - Sinarmas Harta Sdn Bhd - paid RM149mil to take up a private placement exercise in the developer.

The faith in Eco World has paid off well for its investors, Leong included.

Eco World’s brand has landed the developer prominent developments such as the Bukit Bintang City Centre project. It has also gained traction with strong partners such as the Employees Provident Fund (EPF).

The two are developing a mixed project on 890ha in Kuala Selangor that has an RM15bil gross development value.

Eco World and the EPF are also undertaking maiden township developments in Penang.

Besides property development, Leong also holds about a 10.5% stake in water-treatment company, Salcon Bhd,

It has won new water-treatment contracts in Terengganu and Johor totalling RM232.2mil.

The contracts are to build a 120 million-litres-per-day water-treatment plant in Kuala Terengganu and upgrade the Sungai Lebam water-treatment plant and distribution system in Johor.

These contracts will beef up Salcon’s order book by about 40%.

Going forward, Leong is expected to further bask in the corporate limelight as Eco World International, an associate of Eco World, goes for an initial public offering in the first quarter of this year.

Read more at http://www.thestar.com.my/business/business-news/2017/02/04/top-40-richest-in-malaysia-31-35/#3lYd9PWMzXUID2eC.99

PETALING JAYA: Shares of DRB-Hicom Bhd rose to their highest in more than two months, while China’s Geely Automobile Holdings Ltd shares hit a new all-time high following reports of a potential strategic partnership between Geely and DRB-Hicom’s unit Proton Holdings Bhd.

DRB-Hicom’s shares were among the top traded yesterday, with the stock closing at RM1.27 or an eight-sen increase from RM1.19 last Friday. It had risen to an intraday high of RM1.30 just before closing.

The strong buying interest also manifested itself in DRB-Hicom’s cash-settled call warrants, which reported increases of as high as 250%.

Among the top traded call warrants in terms of volume were DRBHCOM28, which rose two sen to 15.5 sen, and DRBHCOM23, which rose 2.5 sen to 3.5 sen.

“Investors are accumulating positions in DRB-Hicom ahead of Proton’s announcement of its preferred partner. Geely itself is a hot stock at the moment, and its growth prospects look attractive,” said an analyst.

Shares of Hong Kong-listed Geely closed at a record high of HK$10.26 yesterday, as investors returned to the market following the Chinese New Year holidays.

Geely is the top-performing stock on the Hang Seng Index with a return of 250% within 12 months.

StarBiz recently reported that Geely is said to be the frontrunner in securing the valuable strategic partnerhip with Proton, which involves the acquisition of a 51% stake in the Malaysian carmaker.

France’s PSA Group is believed to be the other competitor for the partnership.

Should Geely secure access to Proton’s under-utilised Tanjung Malim plant, the group would be able to take up a substantial share of the plant’s annual production capacity of 150,000 vehicles.

According to reports, by virtue of producing the cars in Malaysia, the group would be able to export its vehicles tax-free to any of the 10 members that make up the Asean bloc.

Geely produces a variety of vehicle types, including sports utility vehicles and sedans. It is also slated to launch a new multi-purpose vehicle and a plug-in hybrid electric vehicle by this year.

It also owns the Volvo brand which it acquired in a US$1.8bil deal in 2010.

From Proton’s standpoint, it requires a partner as part of a key provision in the Government’s RM1.5bil soft loan, which was provided to the group last year as part of its business turnaround.

Despite the emerging positive sentiment regarding Geely’s potential entry, industry fundamentals currently look bleak for Proton.

Its market share fell to 12.5% as at last year from 15.3% in 2015. Its total sales fell 29% year-on-year to 72,300 units due to deteriorating market conditions, said Hong Leong Investment Bank Research in a recent report.

http://www.thestar.com.my/business/business-news/2017/02/07/drbhicom-geely-shares-soar/

DRB-Hicom Bhd
(Feb 3, RM1.19)
Maintain add call with an unchanged target price (TP) of RM1.69: Chinese automaker Geely Automobile Holdings Ltd is reportedly leading a three-way race to be the technical partner for Proton Holdings Bhd, ahead of French carmakers PSA Group and Renault SA.

Geely and PSA officials were reportedly in the midst of due diligence work at Proton’s headquarters.

Geely and PSA are reportedly interested in acquiring a 51% stake in Proton’s manufacturing plant in Tanjung Malim, Perak.

Based on company data, the net book value of the Tanjung Malim plant was about RM501 million as of March 2016.

We are not surprised by this as the plant is considered a prized asset for Proton’s potential partner as it would provide immediate access to car production facilities, which is especially valuable to a partner that targets the growing Southeast Asian market.

The government has also reportedly given approval for a foreign company to own a majority stake in the assembly plant.

Overall, we see this as a positive development towards Proton’s recovery as we expect the new potential partner to help Proton boost its manufacturing utilisation rate.

Moreover, we expect the potential partner to provide support in terms of advanced technology, global reach and economies of scale.

DRB-Hicom Bhd currently owns 100% of Proton and we see a potential reduction or disposal of its Proton stake as positive for DRB-Hicom as it would reduce the negative impact from Proton’s losses.

The plant currently produces multiple models such as the Persona, Preve, Iriz and Suprima.

The plant was opened in 2004 with an annual production capacity of 150,000 units but it was designed to have a maximum capacity of one million units per annum, nearly five times its Shah Alam plant’s capacity of 230,000 units per annum.

However, the strategy failed to materialise due to declining sales. Proton’s sales slumped 54% to 72,300 units in 2016 from its record high of 158,700 units in 2011.

Proton chief executive officer Datuk Ahmad Fuaad Kenali recently indicated that Proton expects to announce the foreign strategic partner as early as April 2017, but the official signing could be completed by the end of the second quarter of 2017.

To recap, Proton is required to find a strategic foreign technical partner as part of the conditions set by the government for its approval of the RM1.5 billion soft loan to Proton last year.

We maintain our “add” call with an unchanged sum-of-parts-based TP of RM1.69. Our “add” call is supported by the imminent foreign partner for Proton and better performance in its services division.

Key downside risks are no foreign strategic partner for Proton and further deterioration in Proton’s earnings. — CIMB Research, Feb 2


http://www.theedgemarkets.com/my/article/china%E2%80%99s-geely-reportedly-leads-three-way-race-proton-tie

soon price higher to the next resistance levels of 43.5 sen and 46.5 sen.

AirAsia X grows passenger numbers by 30% in 2016; now serves 11 countries from Kuala Lumpur base with 22 aircraft; US access granted

AirAsia X grows passenger numbers by 30% in 2016; now serves 11 countries from Kuala Lumpur base with 22 aircraft; US access granted

AirAsia X launches Auckland service in 2016
AirAsia X resumed service to New Zealand with the introduction on 22 March 2016 of flights from Kuala Lumpur to Auckland, with an intermediate stop at Gold Coast in Australia. Between April 2011 and May 2012 the LCLH carrier served Christchurch with non-stop flights.

The recent news that AirAsia X has gained permission to serve the US coincides with the carrier reporting record passenger numbers in 2016. The low-cost long-haul (LCLH) carrier will celebrate its tenth anniversary later this year (in November) and currently operates a fleet of 22 A330-300s from its home base in Kuala Lumpur. After shrinking in 2015 the airline grew its passenger numbers by 30% in 2016, to almost 4.7 million. The number of flights was up 21%, ASKs (Available Seat Kilometres) were up 25% as the average sector length increased 4% to 4,944 kilometres, and load factor improved by four percentage points from 75% to 79%. However, this is still below the 82% load factor achieved by the airline in 2014.

AirAsia X quarterly traffic 2013-2016
Source: AirAsia X

AirAsia X has 377 seats on its A330-300s

So what makes AirAsia X a low-cost carrier? Well, getting lots of seats into its fleet of A330-300s is one way of reducing the unit cost. The airline’s 22 aircraft all operate with a total of 377 seats, including 12 premium flatbed seats. Compare this with a basket of other carriers in Asia and Europe and it becomes clear how AirAsia X’s seat costs are kept low. Only Cebu Pacific Air has fitted more seats in the same type of aircraft. Even if all other costs were the same (which they are not), AirAsia X’s costs per seat would be 23% lower than those of local rival Malaysia Airlines, purely based on aircraft seating configuration.

AirAsia X and other carriers - seats on A330-300s
Source: ch-aviation.

In the past the airline also flew two A340s, which enabled it to serve longer-haul markets such as London and Paris, but these were finally withdrawn from service during 2015. AirAsia X’s current longest non-stop services are to Sydney and Gold Coast in Australia which are between 6,500 and 6,600 kilometres. Its shortest sector, at just 3,043 kilometres, is to Chongqing, a route which was launched in September and which has previously been served by AirAsia since July 2015.

Australia is leading country market with almost 40% of ASKs

At present AirAsia X serves just 10 country markets non-stop from Kuala Lumpur, while New Zealand (Auckland) is served via Gold Coast in Australia. An analysis of OAG Schedules Analyser data for the last two years reveals that Australia is the leading country market, accounting for 38% of the airline’s ASKs from Kuala Lumpur. Apart from Sydney and Gold Coast, AirAsia X also serves Melbourne and Perth, as well as having served Adelaide in the past.

Six destinations in China are currently served; Beijing, Chengdu, Chongqing, Hangzhou, Shanghai Pudong and Xi’an, while Tianjin was also served for a period. In Japan AirAsia X serves Osaka Kansai, Sapporo Chitose and Tokyo Haneda.

AirAsia X launches flights to Mauritius in 201
Mauritius joined AirAsia X’s network on 4 October 2016. The route from Kuala Lumpur is currently being flown three times weekly.

One totally new country market was added in 2016 (Mauritius) while flights to India and Iran resumed after a gap of several years. Sri Lanka was dropped from the airline’s network when service to Colombo ended in October 2015. This route was once again taken up by AirAsia which had previously served the market before AirAsia X launched the route in September 2013.

AirAsia X top 10 country markets by ASKs
Source: OAG Schedules Analyser for 2016 and 2015.

Early indications are that the airline’s first route to the US might be Honolulu in Hawaii. With a sector length of 10,962 kilometres this would be not far off the 11,750-kilometre maximum range of the aircraft, according to Airbus data. To reach California non-stop would require an aircraft with a range of well over 13,000 kilometres so maybe AirAsia X plans to offer one-stop, same aircraft flights via Hawaii.

AirAsia X has ordered 66 A330-900neos but these are not expected to become part of the fleet before 2018. The airline also has 10 A350-900s on order with Airbus. The first of these is also expected to join the fleet in 2018.

Learning the hard way

Being a pioneer in the LCLH market has meant a certain amount of trial and error when it came to route planning. As a result the airline has started and then pulled off a relatively high number of routes for a long-haul carrier.

http://www.anna.aero/2017/01/30/airasia-x-grows-pax-up-30-percent-2016/

soon , all proton cars can send to china , with such huge population and demand , protons will have high sales

http://www.thestar.com.my/business/business-news/2017/02/03/cimb-proton-deal-will-fasttrack-geelys-presence/


PETALING JAYA: Geely Automobile Holdings Ltd’s interest in national car manufacturer Proton Holdings Bhd is seen as a move by the China-based automaker to fast-track and build its presence in South-East Asia.

However, the company will have its work cut out for it if it succeeds in the bid for Proton.

The biggest task at hand is to turn around Proton that has been suffering from declining sales, losing market share and is in dire need of a partner with the technical expertise to make it competitive.

CIMB Research, in a report yesterday, said that a company like Geely had the capability to revitalise Proton.








The report was issued after a StarBiz report yesterday, which said that Geely was leading a three-way race to be the technical partner for Proton, ahead of French carmakers PSA Group and Renault SA.

“Overall, we see this as a positive development towards Proton’s recovery as we expect the new potential partner to help Proton boost its manufacturing utilisation rate.

“Moreover, we expect the potential partner to provide support in terms of advanced technology, global reach and economies-of-scale.”

Geely, owner of Swedish carmaker Volvo Cars Corp and the London Taxi Company, had linked to a potential tie-up with British sports carmaker Lotus Cars Ltd - which is owned by Proton.

In November last year, the China auto company denied rumours that it was in talks to acquire a stake in Lotus.

However, it did confirm to have been in discussions with Lotus for a potential technological cooperation.

“It is possible that Geely may still be interested in pursuing this option, and a stake in Proton would give it more say when it comes to making decisions regarding Lotus,” said an analyst.

According to reports, citing chief executive Jean-Marc Gales, Lotus is on course to make a profit this year for the first time in its 68-year history.

It is said that Geely and PSA want 51% in Proton’s manufacturing plant in Tanjung Malim. Towards this end, the Government has given the green light for foreigners to own a majority stake in the assembly plant.

According to CIMB Research, the net book value of the plant was about RM501mil as of March 2016.

“We are not surprised by this, as the plant is considered a prized asset for Proton’s potential partner as it would provide immediate access to car production facilities, which is valuable to a partner that targets the growing South-East Asian market.

“The Government has also reportedly given the approval for a foreign company to own a majority stake in the assembly plant,” it said.

The need to acquire a strategic partner was imposed on Proton as part of the conditions issued by the Government for its approval of an RM1.5bil soft loan to the national car company, in which a bulk of the money would be used to pay its vendors.

Last month, Proton chief executive officer Datuk Ahmad Fuaad Kenali said the company would announce its tie-up with a foreign strategic partner as early as April.

Proton has been a drain on parent DRB-Hicom Bhd’s earnings.

The latter marked its fourth consecutive quarterly loss, reporting a net loss of RM267.55mil in its second quarter ended Sept 30, 2016, compared with a net profit of RM52.67mil in the previous corresponding period.

Proton sold 72,290 vehicles last year compared with 102,175 units in 2015.

Read more at http://www.thestar.com.my/business/business-news/2017/02/03/cimb-proton-deal-will-fasttrack-geelys-presence/#CHpe1EKGVAHRJMKE.99

AirAsia and AAX carried more passengers in 4QFY16

KUALA LUMPUR: AirAsia Bhd and its long-haul sister company AirAsia X Bhd (AAX) both reported higher numbers of passengers carried for the fourth quarter ended Dec 31, 2016 (4QFY16), in line with capacity growth during the three-month period.

However, in a statement yesterday, AAX said it remain cautious in 2017 as it anticipates a challenging environment despite a “success[ful] turnaround story last year”. Still, it remains confident about seeing sustainable growth going forward.

AirAsia carried 7% more passengers in 4QFY16, at 14.51 million versus 13.53 million a year ago, as capacity grew 5% to 17.09 million seats from 16.26 million seats.

The low-cost carrier, the largest in Asia, said its load factor was 85% in 4QFY16, up two percentage points (ppts) from 83% a year ago.

For FY16, the group carried 56.59 million passengers, up 12% from 50.68 million in FY15, while capacity grew 4% to 65.98 million seats from 63.34 million. Load factor for the full year was up 6ppts to 86% from 80% previously.

At its Malaysian ops, from where AirAsia derives most of its revenue, load factor was 87% in 4QFY16, up 2ppts from 85% a year ago, as demand exceeded the 2% year-on-year (y-o-y) increase in capacity. The number of passengers carried by Malaysia AirAsia came in higher by 5% at 6.76 million passengers in 4QFY16, from 6.47 million passengers a year ago.

Other than Malaysia, all of AirAsia’s associates overseas registered growth in passengers carried, except for Indonesia, which was undertaking capacity cuts while its management implemented a turnaround strategy.

Among these associates, AirAsia India charted the most notable growth in the latest quarter with 56% more passengers carried at 792,132, compared with 508,407 passengers last year. Capacity-wise, the unit, the smallest in the group, saw a 52% rise in the number of seats to 921,960 seats from 607,680 over two quarters, and posted a load factor of 86% in 4QFY16, up 2ppts from 84% in 4QFY15.

As at end-2016, AirAsia Group’s fleet comprised 172 aircraft (174 if two aircraft delivered to AirAsia Japan, which has yet to start operations, are included), versus 170 in FY15.

Over at the long-haul business, AAX carried 40% more passengers in the same quarter at 1.38 million, versus 985,739 passengers a year ago.

AAX said the improvement was in line with a 43% y-o-y growth in capacity to 1.71 million seats during the quarter, from 1.19 million seats, to cater to year-end holiday travel demand.

AAX’s quarterly passenger load factor, however, dropped 2ppts y-o-y to 81% from 83%, while available seat per kilometre (ASK) grew 44% y-o-y to 8.47 billion from 5.91 billion.

For the entire year, AAX carried 4.69 million passengers, up 30% from FY15’s 3.61 million passengers, as capacity grew 22% to 5.94 million seats from 4.85 million seats. Load factor for the entire FY16 also grew to 79% from 75% a year ago, as ASK increased 25% to 29.34 billion from 23.39 billion.

http://www.theedgemarkets.com/my/article/airasia-and-aax-carried-more-passengers-4qfy16

The airline’s office will open soon, said AirAsia CEO Anthony Fernandes, after holding a meeting with Prime Minister Hun Sen in Switzerland on the sidelines of the World Economic Forum.


Mr. Hun Sen said AirAsia’s presence would bring more tourists to Cambodia, adding that the airline has helped transport tourists to Cambodia from all over the world.


Keo Sivorn, director general of the State Secretariat of Civil Aviation, said AirAsia’s decision to open an office in Cambodia was in response to the current demand of passengers and cargo to the kingdom.


“It will help the company provide additional satisfied service to its passengers,” said Mr. Sivorn.


“AirAsia has existing flight service operations to Cambodia. It will open an office here soon because it sees the demand of the aviation sector in Cambodia increasing thanks to the country’s high economic growth.”


The new office is also in response to the number of local airlines operating in the kingdom, Mr. Sivorn said.


Ho Vandy, secretary-general of Cambodia’s National Tourism Alliance, said AirAsia would bring more people from all corners of the world to Cambodia because of its popularity offering low fares.


“It’s a reflection of the airline market. It will serve the high demand of passengers and tourists traveling by plane and it will meet the government’s ‘Open Sky’ policy,” he said.


Two local airlines, which are expected to get off the ground this year, will push the total number of local airlines to six, according to Mr. Sivorn. The four now operating are Cambodia Angkor Air, Bassaka Air, Cambodia Bayon Airlines and Sky Angkor Airlines.


“By this year, the two airline companies will hopefully start providing service. Due to economic growth and stable politics, the number of airlines is increasing,” he said.


AirAsia is currently operating 67 flights per week out of Phnom Penh and Siem Reap international airports, according to Mr. Fernandes.


AirAsia swung to a profit in the third quarter of 2016 from a net loss a year earlier. Net profit for the three months ended September 30 was 353.9 million ringgit ($79.62 million), versus a net loss of 405.7 million ringgit a year earlier. Revenue rose 11.2 percent to 1.69 million ringgit, the company said.
http://www.khmertimeskh.com/news/34625/airasia-to-open-cambodia-office/

it just a temporary.. will go up again ...

AirAsia upside move may continue, says RHB Retail Research

KUALA LUMPUR (Jan 19): RHB Retail Research said AirAsia Bhd’s upside move may continue after the stock posted a second consecutive long white candle.

In a trading stocks note today, the research house said the upward momentum is likely to continue, given that it has breached above the downtrend line drawn in the chart.

“A bullish bias may appear at above the RM2.55 level, with an exit set below the RM2.16 threshold.

“To the upside, the immediate resistance level is anticipated at the RM3.00 psychological spot. This is followed by RM3.30 level,” it said.

http://www.theedgemarkets.com/my/article/airasia-upside-move-may-continue-says-rhb-retail-research

Soon , 2.70 , 2.80 , ..to 3.50

AIR ASIA HUAT HUAT AH..... 2.60 Next

http://www.theedgemarkets.com/my/article/airasia-may-consider-dividend-after-sale-plane-leasing-unit

SINGAPORE (Jan 18): AirAsia Bhd, the region’s biggest budget airline, is likely to use most of the proceeds from a proposed sale of its aircraft-leasing arm to pay a dividend, its chief executive officer said in an interview.

The airline expects to get binding bids for the unit by March and close the deal by summer, Group CEO Tony Fernandes, 52, said in a Bloomberg Television interview with Francine Lacqua in Davos, Switzerland, while attending the World Economic Forum. The board of the Sepang, Malaysia-based carrier will take the final call on whether to use the proceeds to pare debt or pay a dividend, he said.

“Our gearing is very low anyway, but I always like to have more cash than less cash,” Fernandes said. “But it’s really up to the board to finally decide what to do with that.”

The divestment of Asia Aviation Capital Ltd. may help bolster the financials of the carrier that has ordered hundreds of jets from Airbus SE and had a net debt of 8.8 billion ringgit (US$2 billion) at the end of September. A dividend may also cheer investors who were rewarded with a 78% rally in the shares in 2016, the best in six years. The asset had received an offer valued at about US$1 billion, Fernandes had said in May.

Established in 2014, Asia Aviation Capital had a fleet of 59 planes as of end-September, leased primarily to the parent’s affiliates. The unit will receive an additional 100 Airbus A320 aircraft and get some A321neos were ordered last year.

Asia Aviation Capital manages aircraft leased to affiliates outside Malaysia, including Thai AirAsia Co, PT Indonesia AirAsia and AirAsia India Pvt, according to filings in 2014. RHB Investment Bank Bhd., Credit Suisse Group AG and BNP Paribas SA are joint advisers to the sale.

“Some people have come in at the last minute,” Fernandes said, referring to bidders. “We’re working with Credit Suisse and the banks to see if they can still make the timeline,” he said, declining to reveal names.

As airlines serving Asia Pacific move to triple their fleet, they’re finding it can be cheaper to lease jets instead of buying them from Boeing Co or Airbus. The relative safety of the leasing business compared with that of an airline has prompted conglomerates led by Hong Kong billionaires Li Ka-shing and Cheng Yu-tung to enter the industry

http://www.thestar.com.my/business/business-news/2017/01/13/airasia-to-list-in-hong-kong/


AirAsia to list in Hong Kong

PETALING JAYA: AirAsia Group is looking at a secondary listing of the airline, AirAsia Bhd, on the Hong Kong Stock Exchange (HKSE) and hopes that it can take place before the middle of this year.

Towards this end, it is believed that China Merchants Bank, an investment bank from China, is likely to get the job to advise and make the relevant submissions for the dual listing.

Tan Sri Tony Fernandes, when contacted, confirmed that there are plans to seek a listing on the HKSE.

“The plan is to list a portion of AirAsia Bhd shares in our Hong Kong-listed vehicle. This provides us access to new capital if required.

“We have a large pool of investors in North Asia, while China is a large part of our market. So, we decided on a dual listing in Hong Kong.

“I am hoping the listing will be in April or May this year ... It would be a great day if it can get listed on April 30, as it is also my birthday,” he said.

Fernandes said that AirAsia was working towards listing a holding company for all its airline operations that span the region.

“However, Hong Kong (exchange) will presently not be the vehicle used for this purpose,” he said. “I have spent the week meeting the various leaders of Asean and the overall response has been positive (towards setting a holding company).”

Apart from a dual listing in Hong Kong, AirAsia’s other units, especially in Indonesia and the Philippines, are slated to be listed this year. Thai AirAsia is already listed on the Thailand Stock Exchange.

“I am confident these units in the Philippines and Indonesia will be listed this year,” Fernandes said.

The listing in Hong Kong is designed to give AirAsia more depth and flexibility in raising capital if required, while at the same time allowing investors an option to benefit from being invested in the vibrant Hong Kong exchange. It also allows investors to arbitrage their investments.

“The exact form is not decided yet, as it has to go to the board. But the bankers have been appointed, they will present the details to the board soon and then we will make the announcement,” Fernandes said.

Dual listings are preferred for companies with cross-border businesses and AirAsia has operations in several countries in Asia, including Japan and India.

How much AirAsia will fetch in valuations for the dual listing is not clear, but locally, its stock closed 13 sen higher to RM2.51 a share, giving it a market capitalisation of RM6.99bil.

Last year, the world’s largest glove maker, Top Glove Corp Bhd, made its debut on the Singapore Exchange Securities Trading Ltd (SGX-ST) with a secondary listing, but it did not involve any issuance of new shares.

Its rationale was to create liquidity and trading activity, enhance investor reach and diversify its investor base, and enable the company to tap into a new platform for potential future fund-raising.

Others on the SGX-ST include IHH Healthcare Bhd and Malaysia Smelting Corp Bhd, while Media Chinese International Ltd is listed in Hong Kong.

AirAsia named "Most Influential Airline in China" at Beijing awards ceremony

KUALA LUMPUR: AirAsia was named The Most Influential Airline in China at the 2016 New Power of Travel Awards held in Beijing on Friday.

The awards, hosted by Sina Travel and Youku Travel websites, review the development and trends of China's travel industry.


In statement today, AirAsia said Sina is the world's largest Chinese-language web portal, while Youku is one of China's top video and online streaming platforms.

"The two websites evaluate travel-related companies and products based on the content and readership by over 800 million people who visit it.

"The awards honour outstanding companies and products as voted by users, and provide travel guides on airlines, hotels and destinations for travellers.

"The awards committee said AirAsia had influenced free and independent travellers in China with its young, passionate and creative brand image since entering the market," it added.

Meanwhile, AirAsia North Asia President Kathleen Tan said the airline is focused on presenting the very best content on Chinese social media, as the country is a very important market for it.

"China is an incredibly dynamic market and we want to deliver an even better travel experience to our fans in China. This includes information on where to find the best food, hidden gems and great travel destinations where amazing memories can be made.

"In line with this, we are working hard with our travel tourism partners and local governments to bring the world to China and vice versa," she added. -- BERNAMA

Maybank IB predicts windfall of 40-50 sen a share after sale of AAC

PETALING JAYA: Two days after Deutsche Bank Group called a “sell” on AirAsia Bhd that led to a slight dip in its share price, two local brokerages have issued research reports maintaining a “buy” call on the airline.

The rationale for the sell call is essentially stiff competition that will push passenger yields down over the next 12-18 months, overcapacity, the weaker ringgit and higher jet fuel prices.

It also questioned how the US$1bil price tag was derived for its leasing unit, Asia Aviation Capital (AAC) that AirAsia plans to sell in the middle of this year.


Maybank IB Research senior analyst Mohshin Alias is more bullish about AirAsia’s fortunes.

He maintains a buy on the stock and predicts a special dividend of 40-50 sen a share from the sale of AAC to investors.

“Coupled with the customary 20% dividend payout which is roughly 7 sen in 2017, AirAsia could be your biggest dividend yield stock in 2017,’’ said Mohshin.

Kenanga Research has brushed off overcapacity and other issues and has a 12-month target price of RM3.82 a share.

Its rationale was based on higher ancillary income with a target of RM60 per passenger in the long-term, healthy loads of about 85% led by strong travel demand coupled with fleet expansion.

It says even though fuel cost was rising, but it will be mitigated as AirAsia has hedged 74% of its fuel requirements for 2017 at US$59 per barrel.

Mohshin expects unit costs to improve on the entry of new Airbus A320 NEOs and believes the fourth quarter 2016 financial results to be “spectacular and says “don’t be surprised if they churn out RM400-500mil of net profit.’’

He adds that “apart from that, it is trading at only 7x 2017 PER with stellar 15% ROEs.’’

His 12 month target price is RM3.17 a share. AirAsia closed 6 sen lower in yesterday’s trading at RM2.17 a share.

Deutsche in its report said “weaker ringgit will filter through to higher costs, and higher fuel prices will also hurt. We have cut our core net profit forecast for 2017-2018 estimates by 1.3% and 16.2% over 2017-2018 estimate respectively.

As at third quarter 2016, associates in the Philippines, India and Japan were still losing money. In Indonesia, AirAsia is converting its debt into perpetual capital securities to comply with local regulations,’’ Deutsche said.

It adds that as the market becomes aware of the earnings decline that AirAsia is expected to see over 2017-2018E, we expect the stock to de-rate to the lower end of its historical valuation range.

Our target price (12 month - RM1.75 a share) is based on an adjusted EV/EBITDAR of 5 times for the Malaysian operations, which is similar to other full service carriers (Cathay Pacific and Singapore Airlines) in the region who are battling similar yield pressures.

But Deutsche also expects a lift if there is less intense competition in the market, pushing up yields to levels higher than expected, the sale of AAC resulting in a higher-than expected exceptional profit and this results in a positive sentiment lift for the stock, currencies in South-East Asia appreciating against the US dollar, especially the ringgit, and a significant decline in jet fuel prices.

http://www.thestar.com.my/business/business-news/2017/01/06/special-dividend-in-the-offing-for-airasia-investors/

Air Asia will be alright.... falling is jz temporary... will rebounce..

http://www.theborneopost.com/2016/12/20/airasia-moves-ahead-with-recapitalisation-of-indonesia-airasia/

KUCHING: AirAsia Bhd (AirAsia) will be moving ahead with the recapitalisation of its 49 per cent owned associated Indonesia AirAsia (IAA).

In a recent filing with Bursa Malaysia, AirAsia’s board of directors after due consideration have approved of the purposed subscription of RM1014 million nominal value of perpetual capital securities issued by IAA at 100 per cent of its nominal value.

The exercise is comparable to a cash injection for IAA and its purpose is to lift IAA out of its current negative equity position of RM1.2 billion.

The move is also to comply with a directive issued by the Directorate General of Civil Aviation of Indonesia (DGCA), of which failure to do so may result in a suspension of IAA’s operations.

AirAsia’s future source of return from this exercise will mainly be in the form of interest, but the ability of IAA to pay interest will be dependent on several factors, such as its operating results, cash flow position, capital commitments, working capital requirements as well as covenants in its future loan agreements.

Due to IAA’s highly competitive environment, its performance will significantly depend on how effectively it can compete with other airlines in Indonesia. Overall, there are some clear risks for AirAsia in the participation of this exercise due to uncertainty of IAA’s long term prospects and performance.

However, the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) was rather optimistic on IAA’s performance, nothing that the group is showing encouraging signs of a turnaround, such as the significant reduction of third quarter 2015 (3QFY15) losses of RM26 million to 3QFY16’s loss RM3.3 million.

“IAA is expected to be profitable in 4QFY16, helped by strong demand due to year-end holidays and an improvement in average fares,” opined the research arm.

As AirAsia would be recognising a 49 per cent share of IAA’s profits or losses under the equity method, the research arm beliebes that AirAsia would likely be seeking to recoup its investment in IAA via an Initial Public Offering (IPO), in the near future.

The research arm maintains its ‘Buy’ call on AirAsia with a target price of RM3.45, which is pegged to a forward price-earnings multiple of 8.5 fold FY17 earnings per share.

AirAsia Group chief executive Tony Fernandes confirmed that the group has received numerous bids for its leasing arm, Asia Aviation Capital (AAC), and expects to sell off the unit next year. He added that these moves are part of the group’s plan “to streamline the business and dispose of non-core businesses”. Even with the US$1bil valuation being quoted in the market for AAC, Macquarie Equities Research (MQ Research) believes that AirAsia can fetch a higher sale price.

Event
•MQ Research maintains their Outperform recommendation on AirAsia albeit a lower TP of RM4.00 (from RM4.65) as MQ Research incorporates lower yields in view of a weak economy and continued competition in the short-haul space. MQ Research believes there is upside risk from monetisation of its leasing entity, Asia Aviation Capital (AAC), which could drive a stock re-rating. MQ Research estimates AirAsia can fetch a higher valuation for AAC than the US$1bn being quoted in the market. The stock is trading at 6.8x 18E EV/EBITDAR vs its historical average of 8.4x.

Impact

Value lies in its order book.
•MQ Research estimates the US$1bn quoted price tag for AAC implies 8.2x 18E PER, in the range of leasing peers’ 6.3-8.8x. MQ Research however derive a US$1.8bn (14.6x 18E PER) valuation for AAC, based on DCF valuation. MQ Research employed a DCF model as order book drives significant embedded value not captured in earnings- or asset-based models. Currently, MQ Research do not have a separate valuation for AAC in our AirAsia SOTP-based TP.

However, limited information on AAC orderbook.
•The current orderbook currently resides with AirAsia and AirAsia would need to novate those purchase agreements to AAC. AAC currently has ~60 aircraft, leased mainly to AirAsia affiliates. A press article said that AAC will receive another 100 A320 aircraft, a figure that we used to derive our US$1.8bn valuation. A US$1bn valuation implies that AAC will receive only 50 aircraft. We will continue to monitor news development on this matter.

How do shareholders benefit?
•A monetisation at US$1.8bn valuation will help to unlock value, as it implies a 14.6x 18E PER, higher than AirAsia’s 9.2x 18E PER. Cash proceeds from the monetisation can be paid out as a special dividend (50% payout = RM1.18/share special dividend) and/or early retire debt. AAC monetisation also reduces payment collection risk from associates, which was an issue in 2015, thus drive a multiple expansion for AirAsia.

Monetisation is key in 2017 as earnings likely to disappoint.
•After a phenomenal 2016, with expected earnings of RM1.5bn (+122% YoY), MQ Research expects AirAsia to deliver a profit of ~RM1bn (-33% YoY) in FY17E. This nonetheless is still higher than the RM697m profit achieved in FY15A. MQ Research FY17E profit after tax (PAT) is however 20% below consensus and the stock could face an earnings downgrade cycle as early as the 1Q17 results in May 2017.

Earnings and target price revision
•FY16E PAT up 1% but EPS up 7% due to change in weighted #shares (delay in founders’ injection). MQ Research’s FY17-18E EPS is reduced 16-20% to incorporate the latest fleet expansion plans and current competitive landscape. MQ Research’s TP is reduced to RM4.00 from RM4.65 on lower earnings and higher net debt.

http://www.thestar.com.my/business/business-news/2016/12/06/hlib-says-accumulate-airasia-shares/

HLIB says accumulate AirAsia shares

PETALING JAYA: Hong Leong Investment Bank Research (HLIB), which has maintained its “buy” call on AirAsia with a target price of RM3.85, has advised investors to accumulate AirAsia Bhd shares amid the recent selldown.

“We view that recent sell down (mainly by foreign shareholders on ringgit depreciation impact to ringgit investment value) presents an attractive entry point for local investors to accumulate AirAsia shares and ride with the expected corporate restructuring exercises, earnings growth and higher dividend payout in 2017,” HLIB said in a report.

The research house said despite concerns of ringgit depreciation, AirAsia was expected to remain on a growth trajectory from the strong capacity expansion, high load factors and low jet fuel costs.

It added that AirAsia’s asset monetisation and joint venture/Associates initial public offering exercises in 2017 would enhance AirAsia’s valuation, with higher dividend payout.

AirAsia has updated its fleet plan for 2017 with an expected growth of 26 net additional aircrafts (+15.9% year-on-year).

HLIB said the fleet expansion was expected to continue until 2028, with an average of 19-20 aircrafts per annum. New deliveries of A320 Neo (15% fuel saving) has begun since September 2016, while the A321 Neo (20% fuel saving) will begin in 2019.

“The planned double digit capacity growth is in view of the market showing signs of strong demand growth (especially traffics on North Asia sector). Given a rational market condition in all countries, management does not expect competitive pressure on its yields in 2017. As a matter of fact, management has seen strong forward bookings in 4Q16 (load factor of 90%) and in early 2017,” it said.

The research house said management had guided that the impact from ringgit depreciation in 2017 would be more than offset by the earnings accretion from capacity expansion as well as higher average yields and ancillary incomes.

PETALING JAYA: Budget carrier AirAsia X Bhd (AAX) will see better financial performance this year on capacity growth but will have to face a more challenging outlook next year due to stiff competition from counterparts operating from KL International Airport and the weaker ringgit.

“We think earnings will peak in financial year 2016 and we forecast earnings to fall quite steeply in 2017 year-on-year (yoy), from the weaker ringgit exchange rate and fiercer competition,” said CIMB Research in a report.

CIMB said AAX delivered a strong operating performance in the third quarter this year, where available seat-km (ASK) capacity growth of 34.3% year-on-year was exceeded by revenue per km (RPK) demand growth of 39.3%, leading to a 2.8% points rise into 77.9%.

“AAX delivered a core net profit in third quarter and the first nine months of this year, reversing last year’s steep losses, on lower oil prices.








It said AAX has grown capacity to a variety of places from Kuala Lumpur to New Delhi, Tehran and Chongqing.

“Capacity increases include to Sapporo, Shanghai, Beijing and Gold Coast.

“AAX’s capacity increase in 2016 was driven by a net of two aircraft deliveries as well as the absence of wet-lease operations, which were used last year as a way of removing excess capacity,” it said.

AAX would also see additional capacity to Mauritius and Madinah which were recently introduced while frequencies were increased to Sydney and Osaka. Melbourne and Taipei will soon each see capacity increase too.

“Fourth quarter ASK growth could hit 40%, in our estimate, which could dampen the yoy yield and revenue per ASK improvements that we had seen all through the past three quarters,” it said.

On the other hand, CIMB Research said Malindo continues to compete with AAX – first introducing Perth in late-2015 and more recently entering Taipei. “Meanwhile, MAS recently announced plans to double capacity to Shanghai and start its maiden flights from KL to Chongqing and Chengdu, which are both monopoly routes by AAX.

“More worrying are MAS’ price promotions, which could affect ticket pricing going forward,” it said.

On top of that, CIMB Research said ringgit depreciation might weaken earnings outlook

http://www.thestar.com.my/business/business-news/2016/11/24/research-house-sees-better-performance-for-airasia-x-this-year/

falling it just a temporary... , will high up later

buy call !

AirAsia X reports 4th consecutive quarterly profit in 3Q, expects first full year profit since 2013

CAPA > Aviation News > AirAsia X reports 4th consecutive quarterly profit in 3Q, expects first full year profit since 2013

23-Nov-2016 10:13 AM

AirAsia X revenue up 24% – financial highlights for three months ended 30-Sep-2016:
•Revenue: MYR982.4 million (USD242.6 million), +23.9% year-on-year;
◦Ancillary: MYR161.8 million (USD40.0 million), +50.1%;

•Costs: MYR934.1 million (USD230.7 million), +13.0%;
◦Fuel: MYR282.1 million (USD69.7 million), -0.1%;
◦Aircraft operating lease: MYR222.2 million (USD54.9 million), +22.3%;

•Operating profit: MYR50.8 million (USD12.5 million), compared to a loss of MYR31.1 million (USD) in p-c-p;
•Net profit: MYR11.0 million (USD2.7 million), compared to a loss of MYR288.2 million (USD) in p-c-p;
•Passenger numbers: 1.2 million, +35%;
•Load factor: 78%, +3 ppts;
•Revenue per ASK: MYR12.70 sen (USD 3.1 cents), -8%;
•Cost per ASK: MYR12.06 sen (USD 3.0 cents), -16%;
•Cost per ASK excl fuel: MYR8.41 sen (USD 2.1 cents), -11%;
•Average sector length: 4965 km, +4%;
•Total assets: MYR4160 million (USD1027 million);
•Deposits, cash and bank balances: MYR367.1 million (USD90.7 million);
•Total liabilities: MYR3306 million (USD816.5 million). [more - original PR]

*Based on the average conversion rate at MYR1 = USD0.246951

http://centreforaviation.com/news/airasia-x-reports-4th-consecutive-quarterly-profit-in-3q-expects-first-full-year-profit-since-2013-618301

http://www.channelnewsasia.com/news/business/malaysia-s-airasia-x-swings-to-q3-profit-on-higher-passenger/3310532.html
KUALA LUMPUR: AirAsia X Berhad flipped to a net profit in the third quarter, versus a year-ago loss, as a weaker ringgit and more capacity on flight routes led to a higher number of passengers for the Malaysian long-haul budget airline.

The carrier, which is expected to report a profit for this year after two straight annual losses, embarked on a business and organisational restructuring in 2015. It has been adding capacity in Australia and increasing frequency on selected existing routes where demand is high to shore up its results


For the third quarter ended September, it reported on Tuesday a net profit of 11.03 million ringgit (US$2.50 million), versus a net loss of 288.2 million ringgit a year ago. This is a fourth consecutive quarter of profits for the company.

Revenue climbed 23.9 per cent to 982.4 million ringgit, driven by increases in seat capacity, ancillary revenue, aircraft operating lease income and freight and cargo revenue, the company said in a statement.

Operations are benefiting from a weaker ringgit that has prompted customers to look at Malaysia "as a value-for-money holiday destination", Chief Executive Benyamin Ismail said.

The company recorded a passenger load factor - a measure of how full planes are - of 78 per cent in the third quarter, three percentage points higher year on year, AirAsia X earlier said in a statement detailing its preliminary operating statistics.

The airline increased its passenger carrying capacity by 34 per cent year on year over July to September.

"Strong demand from North Asia prompted (Malaysia AirAsia X) to add frequencies to Beijing, Shanghai and Osaka while the Australian sector continued to improve with additions warranted for Gold Coast and Sydney," MIDF Research said in a recent note.

The company's capacity expansion primes the airline for the peak travel season at the end of the year, it added.

"Based on the current forward booking trend, the expected number of passengers to be carried in the fourth quarter remains promising. Forward loads and average fares are trending better than the previous year," AirAsia X said.

Parent AirAsia Group's CEO, Tony Fernandes, has said he wants AirAsia X to expand into new destinations in Europe, the United States and Africa.

AirAsia Group, Asia's largest budget airline, is scheduled to report its quarterly results after market close on Thursday.

Shares of both AirAsia X and its parent have more than doubled this year, after sharp losses in 2015.

- Reuters

http://www.nst.com.my/news/2016/11/190934/airasia-x-soars-2016-revenue-almost-rm1-billion

AirAsia X soars with 2016 revenue of almost RM1 billion

By Business Times - 22 November 2016 @ 7:52 PM







KUALA LUMPUR: AirAsia X Bhd (AAX), the long-haul arm of low cost carrier AirAsia, is on track to record a positive full-year financial performance for 2016, three years after its listing on the Main Market of Bursa Malaysia.

The airline posted its first net profit in the third quarter for the financial period ending Sept 30 at RM11.02 million, from a net loss of RM288.19 million in the corresponding period last year.

Its revenue also rose to RM982.40 million, from RM793.01 million a year ago.

AAX attributed the positive financial result to a 54 per cent year-on-year (Y-o-Y) increase in scheduled flight revenue, 50 per cent growth in ancillary income and 34 per cent rise in aircraft operating lease income.

as i told days back , AIR ASIA X result should be good , and it is good !

http://www.thestar.com.my/business/business-news/2016/11/23/airasia-x-posts-rm11m-profit/

http://www.thestar.com.my/business/business-news/2016/11/22/airasia-x-on-track-to-a-positive-2016/

good news of AAX will out soon...

buy buy ,,, report will be good ,,, as past few months flights always full...