Malaysia will see the entry of another low cost passenger airline soon. Rayani Air Sdn Bhd is due to receive its air service license and air operator’s certificate from the Department of Aviation today. It is understood that the new entrant will compete head-on with AirAsia and Malindo Air. Rayani Air will offer flights from KLIA2, Langkawi International Airport, and Kota Baru’s Sultan Ismail Petra Airport (Source: Financial daily)

Comments: We are neutral on the development. While the new entry will create more competition and options for the customers, it may in the medium term, potentially create further price competition within the market, hence capping yields amongst airlines. For now, no change in our BUY recommendation on AirAsia, with a fair value of RM1.85. The logistic sector remains a NEUTRAL.

Source: Affin Hwang Capital Research - 18 Dec 2015