KUALA LUMPUR: Research firm Maybank Investment Bank is expecting a clean second quarter for AirAsia Bhd on strong performance although weighed down by weaker performances in Thailand, India and Philippines.
"The lower year-on-year profit is expected as 2016 was an exceptional year and we remain confident AirAsia is on -track to meet our FY17 forecast.
"We forecast AirAsia’s 2Q17 core net profit to be about MYR221m (-19 per cent year-on-year , -17 per cent quarter-on-quarter).
This would take 1H17 net profit to about RM 487 million, or 39 per cent of our full -year forecast
which is consistent with the Group’s 40:60 1H:2H profit split.
"No change to our earnings forecasts and target price of RM3.75, based on an unchanged ten times 2017 PER
(peer group average)," it said in a note today.
Maybank IB said the airline's operation deserves an applause as AirAsia was able to reduce its operating cost without any noticeable deterioration to its on-time performance.
"There is downside potential to our operating cost forecast assuming AirAsia is able to deliver this impressive level of asset turn sustainably going forward.
"The share price has been trading range-bound since the company’s AGM on 25 May. The shareholders’ approval for sale of AAC is at hand, but the actual transaction remains in the womb.
"The listing of the Indonesian and Philippine associates has been pushed back another year (again) to 2018. It is difficult to pinpoint when exactly transactions will happen, previous predictions have all not materialised." it added.
However, when the transaction does transpire, Maybank IB expects the share price reaction to be swift.
"Cheap valuation and prospective special dividend At current share price, AirAsia’s PER and EV/EBITDAR are the second lowest globally and are also well below their historical averages.
"We also believe that the sale of AAC will happen in 2017 and management will distribute the net pro ceeds via a special dividend.
"Respectable asset utilisation rate AirAsia turned its aircraft at an average of 6.2 times per day in 2Q17.This is an impressive achievement and rivals the best in class globally." the firm further stated.