AirAsia Group (AAGB) is acquiring Gojek’s operation in Thailand. The deal is said to be a win-win for both AirAsia’s SuperApp expansion in the ASEAN region while enabling Gojek to increase investments in its Vietnam and Singapore operations. While we are positive on the deal as it allows AAGB expand its footprint in other ASEAN markets and further increase value of its digital assets, we are of the view that AAGB’s digital business is still at its infancy stage and unable to offset the pandemic’s crippling effect on its aviation business. With no end in sight for travel restriction as well as rising fuel prices, we maintain our Underperform call on AAGB with unchanged target price at RM0.19.

• AAGB’s digital business. AAGB launched its SuperApp in Oct 2020 to rival companies such as Grab, Gojek and WeChat. The app offers a wide range of services from travel to lifestyle, health care, food delivery and financial services. AAGB is expected to introduce its ride-hailing service soon to compete with Grab which is a dominant player in Malaysia.

• Proposed acquisition. AAGB‘s digital arm, AirAsia Digital will acquire Gojek’s operations in Thailand. Gojek Thailand currently offers ride-hailing, food delivery and payments. The purchase consideration of USD50m will be satisfied via the issuance of new shares in AirAsia’s SuperApp (Fig.1), which will give GoJek a 4.76% stake. With this the implied value of AirAsia’s SuperApp is estimated at around USD1.0bn (RM4.1bn).

Source: PublicInvest Research - 8 Jul 2021