Valuation and recommendation
 We believe recent sell-down of AirAsia has priced in most risks, namely (1) yield compression due to intensifying competition, and (2) uncertainty over its entry into India due to potential conflict of interest by one of its JV partner. As such, there is opportunity now for investors to accumulate AirAsia to ride on its long term growth story. Furthermore, we see the potential rise in tourist arrivals during the Visit Malaysia Year 2014 as a platform for yield recovery.
 AirAsia is currently trading at CY13 and CY14 P/E of 7.9 and 6.6x, respectively, as compared to the P/E range of 5x to 28x and mean of 11x over the last 7 years. As such, we maintain our BUY recommendation on AirAsia with an unchanged TP of RM4.20, based on FY14 P/E of 11x.

Our comments
 We are positive on the news as it means another step forward in AirAsia’s foray into the Indian market with the procurement of AOC as the final hurdle before commercial operation commences.
 Having said that, AirAsia India’s on-going negotiation to secure authorities’ approvals to operate international routes may delay the award of the AOC. Note that, a start-up domestic airline in India is required to have a 5-year operating history before it is allowed to operate international routes.
 Investors should note that any delay will not have an adverse impact on AirAsia’s near term earnings outlook as the new JV is not expected to be profitable in the near-term.
 Management also guided that AirAsia India will begin its operation with 4 aircrafts. Its target destination will primarily be within Southern India, serving destinations such as Calcutta, Goa and Chennai.
 Meanwhile, we are concern that Tata Sons’ proposed JV with Singapore Airlines to start a new full service carrier in India will lead to potential conflict of interest.

Now I bring old positive news for all holders of AA..


AirAsia India secures NOC
AirAsia announced that AirAsia India has received the NOC from the Ministry of Aviation of India, which paves the way for AirAsia India to apply for the AOC. However, AirAsia’s on-going negotiation with the authorities to secure an exemption from having to have a 5-year domestic track record before commencing international routes may delay the procurement of the AOC. Furthermore, the recent partnership between Tata Sons and SIA leads to uncertainty in AirAsia India’s shareholding structure due to potential conflict of interest. Nevertheless, we believe recent sell-down of AirAsia has priced in most risks including yield compression and there is now an opportunity for investors to accumulate at undemanding valuations. We maintain our BUY recommendation on AirAsia with an unchanged TP of RM4.20, based on 11x FY14 P/E.

if you are a gentleman or a normal trader, then queue just like so many traders & no need to bring same news repeatedly.... for a change why not write something constructively for the good of all AA share holders???????????

haahaahaa...don't pour cold water repeatedly with the same thing or news to discourage others to sell you cheap, too bad indeed

cheeseburger Airasia will mostly be included into fund manager's portfolio of choice for next year.
21/11/2013 10:06


yes , cheeseburger , this is real good news indeed. No way to sell cheap my friends. Hang on & you will get your good returns.

market is bad today, so AA down a few cents is reasonable...but some dingy purposely throw 4 lots each time at 1 cents cheaper, reason? trying to get cheaper?? NO WAY MAN!!!

Once AA Indonesia is listed, then AA makan tak habis, haahaahaa...don't pour cold water repeatedly with the same thing or news to discourage others to sell you cheap, too bad indeed, a real shame to panic traders, not a gentleman as you think traders here are stupid????

Maintain BUY. FY14 is expected to be a better year as earnings from associates improves and the listing of Indonesia AirAsia to crystallise valuations. We maintain our BUY call but reduce our FV to MYR3.63 (from MYR3.94), premised on 12x FY14F P/E (from 13x FY14F P/E). Currently trading at 8.4x FY14F P/E, it is still cheaper than the 9.6x FY14F P/E average of its Asian peers and 11.4x FY14F P/E of its global peers (see Figure 3). Incorporating the current market cap of its listed entities, and valuing its Indonesia operations at 14x, AIRA’s Malaysian operation is valued at 5.7x FY14 P/E (see Figure 4).

Yes, maintain BUY, BUY, BUY

3Q13 results preview. We expect AIRA to report 3Q13 revenue, EBITDA and core earnings of MYR1.28bn, MYR373m and MYR129m respectively. As yields will continue to be under pressure, its 9M13 earnings are expected to decline by 12% YTD, accounting for 58% of FY13 forecasts (9M12: 60%). Yields in 3Q13 are expected to pick up q-o-q, but will drop 8% y-o-y on the challenging landscape (see Figure 2).

- Revising forecasts. We notably tweak our earnings estimates on lower jet fuel assumptions, as we had earlier projected a conservative jet fuel cost of USD135 per barrel for FY13F-15F vs the YTD average of USD122 per barrel currently. We also assume higher advertising costs. Accordingly, our FY13/15 earnings forecasts are lowered by 2%/3% respectively while FY14 earnings remain unchanged.

AIRA posted an 11% y-o-y increase in 3Q13 passenger numbers with load factor unchanged, but we expect 9M13 core earnings to fall 12% YTD on yield erosion. Thus, we revise our FY13F/15F earnings lower by 2%/3%. However, as overall profitability improves in FY14, AIRA remains a BUY but at a lower FV of MYR3.63 (from MYR3.94).

- Operating stats to stay firm. AIRA’s 3Q13 operating statistics were decent with passenger and revenue passenger kilometre (RPK) growing 11% y-o-y (YTD: +10%) while load factor remained unchanged at 77% (YTD: +78%). We note that the carrier is lowering its airfares to sustain these loads to raise awareness and stimulate demand. Thus, we expect yields to drop by 4%/1%/2% for FY13F/14F/15F, attributed to intensifying competition from Malindo Air and Malaysian Airline System (MAS MK, NEUTRAL, FV: MYR0.34).

still staying firm & strong despite the weak & bad market, hold on as once market is good, it will shoot.

drop to $1, hahaha

Public Bank says this..'
AIRASIA X BERHAD - Decent 3Q Results Amid Stiff Competition

and this too..

Continued expansion of routes and existing frequencies. For the
third quarter, AAX launched the two new routes flying from KL to
Adelaide and Maldives via Colombo as well as adding frequencies on
existing routes such as Taipei and Perth. The net increase of operating
fleet by another five A330s had caused the bump in capacity by
+32%yoy. AAX also officially announced that Nagoya as its 19th
destinations and is expected to commence the flight by 1Q14.


Maintain BUY with revised TP of RM1.60. We are adjusting upwards
our costs assumptions and imputing slightly slower growth in yield.
Consequently, we reduce our FY13-14 forecasts by -15% and -6%
respectively. However, we are reiterating our BUY recommendation on
AAX with revised TP of RM1.60. Our valuation is derived from FY14 -
PER of 12.0x, which is the average of the global LCC peers. Despite the
steep decline in yield base among the regional carriers, we believe that
the yield base of long-haul LCC can be sustained. This is due to
growing demand of long haul travel, especially low-cost. The fourth
quarter is traditionally the strongest for long haul carriers and we should
see improvement in earnings.

And MIDF says this..


Stripping the unrealized forex item and deferred taxation, AAX
registered 3Q13 core net profit at RM4.2m, reversing last
quarter’s net core loss of RM28.4m.
• Long term prospect of the long haul LCC remains intact as
growth in Asian travel demand stays healthy.
• Maintain BUY with revised TP of RM1.60, derived from FY14–
PER of 12x, which is the average of the global peers.

market bad but buying % is at 51%, no bad indeed as it shows that there is buying support.

Now read what RHB says...

Results beat expectations. AAX reported 3Q13 net profit of MYR26.4m and cumulative 9M13 net earnings of MYR44.3m. After stripping off IPOrelated expenses and unrealised forex losses, 3Q13 and 9M13 core net profit stood at MYR55.8m and MYR113.5m respectively. Much of these profits were boosted by a higher-than-expected investment tax allowance. Nonetheless, we consider the numbers broadly in line ours but below consensus. Core 9M13 PBT before tax allowances and other exceptional items came in at MYR26.5m vs our MYR74m full-year PBT forecast. We think the shortfall could be made in the seasonally stronger 4Q.


Outlook positive, BUY maintained. AAX is expected to continue its growth momentum into FY14, backed by its new international hub in Bangkok, Thailand; KLIA2’s opening and the Government’s initiative in promoting the domestic tourism sector. In the short-term, AAX is now our Top Pick in the Malaysian airline space. We still like MAHB (MAHB MK, BUY, FV: MYR10.13) for the longer-run. Our earnings forecast are unchanged. Maintain BUY and MYR1.65 FV – based on 8.5x adjusted FY14F EV/EBITDAR, in line with the average for Asian low cost carriers.


...AAX will fly, just wait for it.

HJey Camrybenz, i take back my words. You are still far from being a bad guy.

thank you HJey, let's co-operate by making our venture a success , then we all can yamseng, you too HJey included.

OneMillion AAX is due to take off, just matter of time, smile : )

it will, it will, just be patient & any time now from today.

today's show is over, now to wait the 3Qt results in an hour so so, if good, then AA flies tomorrow, fingers cross but I feel the results will be positive.

HJey, no bullying at all as he try to get it cheap by saying all bad to try to frighten investors to panic sell cheap to him. If he want to buy cheap, then yesterday he can buy cheap, so why don't he??? Why now?

can it sustain at $2.50? now more than 3659 lots buy at $2.51 cents at closing, so?

haha, cannot get cheap , now pour cold water & if results are good, then AA flies, haahaa..so let's wait.

no HJey, just a silent reader before.

say sayonara to $2.50, haahaa

coming to $2.51 cents now, watch it.

richienexus KLCI down more than 10 pts but AA stil up by 3 sen. Positive news...

yes, positive sign indeed & nobody is so stupid just to throw their money away for nothing.

well, let's not argue, may the best man wins & in another hours or so we will know what the results are like. If you want to buy cheap you should buy yesterday and not today shouting at the top of your voice hoping to get it cheap.

have you look into your crystal ball saying that AA 3Qt results will be bad? I fell rally will continue...what about you, still want to collect cheap?

don't worry about Maybank, just worry for yourself please, after all you cannot afford to lose like rich Maybank.lol

haha, now more than 1.1 million units want to buy cheap, maybe after when the $2.50 units are gone, they will again queue at $2.50 , lol

AAX still in control today even in bad market.

Chuan Wei Chong , exactly and 100% in what you just said. As I said earlier those who wanted to buy cheap will say all sorts to things to frighten investors to sell cheap but we are not that stupid to be taken for a ride. Are we? Just wonder when it was down yesterday, they don't buy & today naik they want to buy cheap, OMG.

though market is weak today, AAX still got buying support at 50%, if market is good, then AAX will perform better. watch out for it.

amywo, I think AA should go above $2.50 after 4.00pm ...let's watch.

more than 10 million shares traded today & buying percentage is a high at about 65%, so what does it tell you?

sudah masuk longkang?

is it so, you saw your crystal ball?

bukan MAS lah.

it will go beyond $2.50, that's for sure.

Mind you Malaysian Ringit is getting stronger against US $$, so why worry???

those who want to collect cheap say be careful but I am just optimistic about AA, mind you it's not MAS.

mind you AA is not MAS & run professionally. And just a while ago someone bought about 3 million shares at 1 go, price $2.50, so like MAS?

cheap cheap now to get it.

carry on buying.

no oversold but buy for mid term, it's rather cheap now & so I bought plenty more.

today how?

today up & away it goes..go for it.

anyone?