Airasia Group Berhad - 2QFY19 Operating Statistics

Date: 24/07/2019

Source  :  PUBLIC BANK
Stock  :  AIRASIA       Price Target  :  2.33      |      Price Call  :  HOLD
        Last Price  :  1.69      |      Upside/Downside  :  +0.64 (37.87%)

AirAsia Group announced its 2QFY19 operating statistics, with the consolidated operations (Malaysia, Indonesia and Philippines) reporting higher passengers’ volume, +18% YoY to 12.8m, in-line with the increase in seat capacity of 18.6%. Load factor was flat YoY at 85%. During the quarter, it added five aircraft to its fleet size i.e. four aircraft for Malaysian operation and one aircraft for Indonesian operation. Meanwhile, Thailand (TAA), India (AAI) and Japan (AAJ) operations reported load factors of 82%, 90% and 78% respectively. AirAsia is scheduled to release its results and passenger yield data on 28th August 2019. We maintain our forecast and Neutral call on AirAsia, with target price of RM2.33 pegged on 11x FY20F EPS.

  • 2QFY19 statistics above expectations. AirAsia consolidated operations reported higher passengers’ traffic volume of 18% YoY to 12.8m, in-line with the increased in seat capacity of 18.6% YoY to 15.1m in 2Q19. Both were above our expectations, accounting for 57% of our FY19 forecasts respectively. Load factor, however, was flat YoY at 85.1% (vs 85.5% in 2Q18) (Table 1). During the quarter, four aircraft was added to fleet size of its Malaysian operation (MAA) and one aircraft added for Indonesian operation (IAA). Despite low season, MAA and IAA loads’ remain strong at 84% and 82% respectively, supported by seasonality of Lebaran and school holidays. Meanwhile, Philippines operation (PAA) also added its capacity by 18% YoY as it increased its flight frequencies for the domestic routes. Despite that, its passengers’ load remained strong at 91%.
  • Associates’ performance. In 2Q19, Thailand (TAA) recorded lower load factor at 83%, compared to 85% in 2Q18, due to a stronger Baht and weaker than-expected tourist arrivals from China (Table 2). Meanwhile, India (AAI) added one aircraft during the quarter, bringing its fleet size to 21. However, approvals to commence international flights is still pending at this juncture. Load was strong at 90% during the quarter, as its passengers carried growth of 25% exceeds its seats capacity growth of 21% YoY (Table 3). Its Japan (AAJ) unit showed flat YoY load factor at 78% (vs 79% in 2Q18 (Table 4).

Source: PublicInvest Research - 24 Jul 2019

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