M & A Securities maintains Hold on AirAsia, fair value RM3.28

M & A Securities maintains Hold on AirAsia, fair value RM3.28
Business & Markets 2013
Written by theedgemalaysia.com
Wednesday, 12 June 2013 08:19


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KUALA LUMPUR (June 12): M & A Securities Research has maintained Hold on AIRASIA BHD [] with a fair value RM3.28 after the lowe cost carrier said there was a possibility that it may exit from its almost two-year old joint venture (JV) with All Nippon Airways in AirAsia Japan due to differences of opinion within the management of the new airline.

Citing AirAsia in a note Wednesday, the research house said the airline had said the differences were most critically on the points of how to operate a low cost business and operating from Narita, Japan's major airport.

As a result, the low-cost carrier said in a statement on Tuesday that it would not rule out any option, including dissolution of the JV which was established in August 2011, it said.

“The potential dissolution of AirAsia Japan is within our expectations as the management has failed to agree on their business plan to manage costs. To recap, AirAsia Japan posted a net loss in 1Q13 of which -RM33.2 million is equity accounted in the financial statement of AirAsia Bhd.
“We maintain our Hold call on AirAsia and Fair Value at RM3.28 by pegging to the average 3-year P/E multiple of 10.9x to its EPSFY14F of 33.4 sen and applying a 10% discount to the actual value of RM3.64 due to the i) weaker-than-expected 1Q13 results and ii) negative sentiment of the entry of Malindo Airways,” it said.