AirAsia eyes sharp growth

AIRASIA GROUP says it will push for higher passenger loads while keeping a tight lid on costs to sustain earnings this year and mitigate the effects from rising oil prices and volatility in currencies.


Chief executive officer Tony Fernandes said he was forecasting 10-per-cent revenue growth this year after a similar jump to 6.9 billion ringgit (Bt54 billion) last year.

“Our strategy of investing in technology three years ago will give us a huge advantage in the next five years, and it will be a big help in reducing costs and growing revenue.

“We think we are finally moving towards our ancillary income target of 60 ringgit per person this year.

“Ancillary continues to be an engine of growth and revenue will grow this year,’’ he said.

AirAsia, which recorded 2.03 billion ringgit in net profit last year, is seeing forward loads this quarter at 89 per cent.

Last year, passenger loads rose 10 percentage points to 86 per cent and the group flew 56.5 million passengers.

In its presentation to analysts last week, AirAsia said it was targeting ancillary income of 60 ringgit next year after reporting 50 ringgit last year, but Fernandes wants to achieve 60 ringgit this year.

“We see big areas of growth, led by the boom in data. We will be able to offer more personalised and more conversion on our websites, leading to more sales.

“Our mobile strategy is for AirAsia to be the first choice of travel to buy products led by ease and lowest fares, more so with our express pay, which is equivalent to amazon one click,” he said.

AirAsia said at least 70 per cent of its sales came directly via airasia.com.

There was more room for growth in the conversion rate, which is now at 5 per cent. A single percentage-point increase translates to additional sales of 1 billion ringgit.

“Indonesia and the Philippines are new engines of growth. Asean inter-travel is booming as long as costs are low,” he said.

With the rising demand for air travel, “I had to use other airlines in the last few weeks, as I could not get into our own flights. That has happened the first time to me since the past 16 years.”

For the past two years, AirAsia reported 2 billion ringgit in net profit, largely from higher sales, lower fuel cost and with its rivals, mainly Malaysia Airlines, still in recovery mode.

But analysts have said the playing field will get tougher this year, something that Fernandes is not overly concerned about.

CIMB Research, in a note, said Malindo Air’s remarkable capacity expansion last year and planned growth this year meant AirAsia would face more competition this year.

AirAsia is also planning to expand capacity by eight aircraft this year, after shrinking the fleet last year.

It added that with the weaker ringgit and higher oil price, it expected AirAsia’s core earnings per share for financial 2017 to fall by 52 per cent.

“The group plans to increase available seat kilometres by 10 per cent. It is willing to sacrifice yields to maintain loads, which suggests a potential decline in revenue available seat kilometre,” Morgan Stanley Research said in a report.

“Fuel costs should remain stable, with 75 per cent of fuel requirements hedged at US$60 per jet barrel. We expect 2017 operating margins to remain healthy at 23 per cent.”

To Fernandes, his biggest challenge is to get regulators to understand the difficulties that airlines face in growing markets.

“What we have been doing for 16 years shows us that we are competitive, in fact we are durable to competition.

“There has been competition for 16 years but we have continually grown margins and profits and our main secret is low cost, great people and huge networks. We made money when oil was at $140 a barrel.

http://www.nationmultimedia.com/news/business/aec/30307427

buy call now immediately

KUALA LUMPUR: My EG Services Bhd’s (MyEG) earnings for its second quarter (Q2) ended Dec 31, 2016, grew a strong 57% to RM47.6mil from a year earlier.

The electronic government services provider told Bursa Malaysia that the improved profit achieved on 40% higher revenue of RM88.7mil were due mainly to two factors.

These are higher transaction volumes from the online renewal of foreign workers’ permits and insurance (FWP) and foreign worker rehiring programme services, and an increase in revenue contribution from its motor vehicle trading-related services.

The company posted a 49.9% boost in earnings in the first six months of the financial year to RM88.1mil. Revenue advanced to RM167.3mil from RM124.2mil in the same period of 2015.

On its prospects for the full financial year ended June 30 (FY17), MyEG said while concession services continued to be its core business, non-concession-related services, such as the road safety diagnostic services, sale of prepaid top ups for Celcom mobile lines and provision of hostel accommodation to foreign workers, were expected to contribute to its growth for FY17.

“Barring any unforeseen circumstances, the directors of MyEG are cautiously optimistic that the results for FY17 will continue to be satisfactory as more Malaysians adopt online government services as a convenient and cheaper alternative to transact with the Government,” the company said.

Over the last five financial years, MyEG had seen double-digit earnings growth and profit margins annually, with the figures increasing each year. Its income climbed 91% in FY16, while net profit margin hit 50.6%.

The board declared a first interim dividend of 0.5 sen per share (2016: 0.5 sen) amounting to RM18.03mil (2016: RM12.02mil) for the current financial year ending June 30, 2017, payable on May 24.


Read more at http://www.thestar.com.my/business/business-news/2017/02/28/myeg-posts-another-solid-set-of-results/#RWrIXFXmjQMkPoT3.99

CIMB Research estimated AirAsia’s special dividend to be RM1.12 per share after the sale of its leasing arm, Asia Aviation Capital.

According to Bloomberg consensus, of the 24 research houses tracking the airline, 18 have a “buy” call on the stock with a 12-month consensus target price of RM3.29.

On Friday, the stock shed 6 sen to close at RM2.70 a share. The consensus estimates for revenue for 2017 is RM6.9bil and for operating profit, RM1.5bil

Read more at http://www.thestar.com.my/business/business-news/2017/02/27/again-airasia-eyes-doubledigit-growth/#ky83bcXi5BXOykzI.99

PETALING JAYA: AirAsia Group will push for higher passenger loads while keeping a tight lid on costs to sustain earnings this year to mitigate the effects from rising oil prices and volatility in currency.

AirAsia group CEO Tan Sri Tony Fernandes said he is forecasting a 10% revenue growth this year after a similar jump to RM6.9bil last year.

“Our strategy of investing in technology three years ago will give us a huge advantage in the next five years, and it will be a big help in reducing costs and growing revenue.

“We think we are finally moving towards our ancillary income target of RM60 per person this year. Ancillary continues to be an engine of growth and revenue will grow this year,’’ Fernandes said in a reply to questions from StarBiz.

AirAsia, which recorded a RM2.03bil in net profit last year, is seeing forward loads in the first quarter of 2017 at 89%. Last year, passenger loads rose 10% to 86% and the group flew 56.5 million passengers.

In its presentation to analysts last week, AirAsia said it was targeting ancillary income of RM60 in 2018 after reporting RM50 in 2016, but Fernandes wants to achieve RM60 this year.

“We see big areas of growth, led by the boom in data. We will be able to offer more personalised and more conversion on our websites, leading to more sales.

“Our mobile strategy is for AirAsia to be the first choice of travel to buy products led by ease and lowest fares, more so with our express pay which is equivalent to amazon one click,’’ he said.

In its presentation slides, AirAsia said at least 70% of its sales came directly via airasia.com, adding that there was more room for growth in conversation rate, which is now at 5%. A single percentage point increase translates to additional sales of RM1bil.

“Other revenue of growth is our associations. Indonesia and the Philippines are new engines of growth. Asean inter-travel is booming as long as costs are low,’’ Fernandes said, adding that with the rising demand for air travel, “I had to use other airlines in the last few weeks, as I could not get into our own flights. That has happened the first time to me since the past 16 years.’’

For the past two consecutive years, AirAsia reported RM2bil in net profit, largely from higher sales, lower fuel cost and with its rivals, mainly Malaysia Airlines Bhd, still in recovery mode. But analyst have said that the playing field would get tougher this year, something that Fernandes is not too overly concerned about.

CIMB Research, in a note, said Malindo Air’s remarkable capacity expansion in 2016 and planned growth in 2017 meant that AirAsia would face more competition this year. AirAsia is also planning to expand its capacity by eight aircraft this year, after shrinking the fleet last year.

It added that with the weaker ringgit and higher oil price, it expected AirAsia’s core earnings per share for financial year 2017 to fall 52%.

“The group plans to increase available seat kilometre by 10%. It is willing to sacrifice yields to maintain loads, which suggests a potential decline in revenue available seat kilometre.

“Fuel costs should remain stable, with 75% of fuel requirements hedged at US$60 per jet barrel. We expect 2017 operating margins to remain healthy at 23%,’’ Morgan Stanley Research said in a report.

To Fernandes, his biggest challenge is to get regulators understand the difficulties that airlines face in growing markets.

“What we have been doing for 16 years shows us that we are competitive, in fact we are durable to competition. There has been competition for 16 years but we have continually grown margins and profits and our main secret is low cost, great people and huge networks. We made money when oil was at US$140 a barrel.

“To compete, you have to be better than us. To have lower fares than us, you have to have lower costs.

“You must remember that we are competing in markets where we are a significantly smaller player such as in Indonesia, India and the Philippines. Yet, we have and are heading towards the AirAsia Malaysia-style of profitability. The key to sustainable profits is low costs. The right strategy is continued innovations,’’ Fernandes said.

AirAsia Malaysia is the biggest contributor towards group revenue. Its cost per available seat kilometer in the last quarter of 2016 was 11.70 sen, said to be the lowest for an airline globally.

On the 2016 financial results, Macquarie Research said, stripping out exceptional gains of RM403mil, AirAsia’s net profit would be at RM1.634bil. The research house said this was up 141% year-on-year, beating its own estimates and consensus estimates by 6% and 8%, respectively.

“We were positively surprised to see that AirAsia’s fuel consumption increased only 4% despite carrying 16% more traffic in the year,’’ it added.

Though Fernandes is talking about sustaining the growth momentum in 2017, AirAsia’s primary attraction for this year is the speculated special dividend from the low-cost carrier.

http://www.thestar.com.my/business/business-news/2017/02/27/psa-to-make-msia-rd-centre-if-its-partners-proton/


KUALA LUMPUR: Renowned car maker, Frances PSA Group, has ambitious plans to transform Malaysia into a strategic base to develop and manufacture a new range of cars destined for the global market if its proposed partnership with Proton comes to fruition, an industry source said.

He also said that the PSA Group, which makes the world famous Peugeot and Citroen cars, is looking to open an Asian research and development (R&D) centre.

“That means if they bag Proton Malaysia, it would naturally benefit by being named PSA’s Asian R&D centre,” he said.

Therefore, joining hands with a foreign strategic partner (FSP) would enable the national car manufacturer to go global.








Currently, as a standalone company and under-utilising the manufacturing capacity of its two plants, he said it would be impossible for Proton to achieve the economies of scale to compete in the global market.

“Proton requires know-how and funds for R&D programmes to compete with global car brands, locally and abroad, as it is still at the bottom of the ladder in homegrown automotive technology.

“This is simply because the cost of R&D runs into billions of ringgit and Proton, on its own, cannot afford to go it alone,” he told Bernama.

A case in point is the development cost of just one model, the Proton Iriz, which was at RM600mil and this did not include marketing, distribution and other related costs.

Just to recover the development cost of RM600mil – at roughly RM60,000 per unit, Proton would have to sell 10,000 Iriz cars, the source said.

Other players such as Honda and Toyota are able to spread their costs across millions of cars as their cars are sold worldwide.

“Thus, the cost is spread with the volume across many countries,” the source said.

Early last week, Chinas Geely Automobile Holdings Ltd said it is prepared to share with Proton its know-how, co-developed with its Swedish subsidiary Volvo car, as part of the companys pitch to seek control of Proton.

In addition, Geelys Volvo in Malaysia had attained energy-efficient vehicles (EEV) status for its models equipped with Drive-E powertrain last year.

The source said the writing on the wall is all too clear for Proton to join hands with a FSP if it is to succeed.

“The only way to do this is by marrying a big auto player, two of which have submitted their bids, as of Feb 15, seeking Proton’s hand in marriage for what could be a long-term mutually rewarding relationship,” he said.

An auto analyst cited how Proton still produced cars with Euro 4 engines, which made it impossible to sell cars to the United Kingdom as the European market only wanted engines with Euro 6 car-emission standards.

However, a foreign partner could facilitate the production of new engines through new and updated designs and technologies, which are accepted in developed markets.

In the process, penetrating developed markets, which would ramp up production at its manufacturing facilities, could go a long way to revive Proton. — Bernama

Read more at http://www.thestar.com.my/business/business-news/2017/02/27/psa-to-make-msia-rd-centre-if-its-partners-proton/#axtsYgm6DM5rqqcT.99

Time to sell lah.....



Pestech 2Q net profit down 24% as revenue slips


KUALA LUMPUR (Feb 24): Power systems technology firm Pestech International Bhd's net profit fell 24% to RM13.16 million in the second quarter ended Dec 31, 2016 (2QFY17), from RM17.3 million a year ago, mainly due to lower revenue.

A filing with Bursa Malaysia showed its quarterly revenue declined 18% to RM119.94 million from RM146.33 million, which the company explained was due to the current project phases.

Higher administration expenses and finance costs during the quarter also impacted profit.

For the six-month period (6MFY17), net profit fell 34% to RM25.1 million from RM37.85 million — though revenue grew 14% to RM222.77 million from RM194.62 million. The weaker earnings was due to higher cost of sales, expenses and finance costs.

On prospects, Pestech said it has always readied itself to embrace immense and pressing requirements for power infrastructure build-up in the region.

The group continuously expand its business reach in the regional countries that it has built solid footprints, and also diligently explore potential new markets to sustain its momentum for growth.

"We anticipate to experience positive business contribution from our home turf, Malaysia, Indochina area, especially Cambodia, and the Central Asia region. Whilst charting its growth path, the management is always mindful to endeavour the equitable development of its power transmission, rail electrification, power plant control systems, and power products business segments," it added.

Pestech said the eventual cohesive and integrated development of all those segments of business would propel the further transformation of the group into a well-rounded power infrastructure services and products corporation in the region.

At 3.21pm, shares of Pestech were traded unchanged at RM1.74, with 2.17 million shares traded, for a market capitalisation of RM1.34 billion. The counter has been on an upward trend since the beginning of the year, climbing more than 13%.

Assuming a modest premium of 10%, the warrants should be worth =

4.65 (Gamuda closing price) x 1.1 (10% premium) - Exercise Price 4.05 = 1.065 (current price 0.90)

Still got plenty of room to go up. Buy Buy Buy !!

arc888 , good sample formula ! thx

kps will up .... 1.50

MBSB price target RM2.75

MBSB ... gonna move ... price target RM2.75 . AFTER CIMB / RHB CAP... price increase .. .. next MBSB gonna move..

predict the next move osk stock goin up on Monday 29/12/2014.... price target 2.10