Journey to Wealth
AirAsia - OUTPERFORM - 24 May 2012
Period 1Q12
Actual vs. Expectations
Slightly below ours and the consensus estimates.
The 1Q12 core net profit of RM163.6m made up 18% and 16% of ours and the consensus' fullyear FY12 forecasts of RM896.4m and RM976.0m respectively.
Dividends No dividend was declared during the quarter.
Key Result Highlights
QoQ, the core net profit fell 42% on the back of a 8% drop in revenue. This was mainly due to a seasonally slower quarter as compared to the peak period in 4Q11. Total cost increased by 11% as staff cost increased by 22%.
YoY, the revenue grew by 11% backed by higher ticket sales of 11% and also a fees surcharge imposed during the quarter. However, the core net profit dropped by 12% as fuel and staff costs increased by 17% and 27% respectively.
AirAsia has already equity accounted for both Thai AirAsia (TAA) and Indonesia AirAsia (IAA) during the quarter. It has also accounted for a loss of c. RM12m from TAA IPO expenses and IAA operating loss.
Outlook 1Q12 is a seasonally slower quarter for AirAsia and we expect the earnings to pick up in 2Q12 onwards due to the school holidays and positive contributions from its associates.
TAA is scheduled to list on the Thailand Stock Exchange on 31st May 2012 while IAA listing would be by 4Q12.
Change to Forecasts
There are no changes to our FY12 and FY13 forecasts. We have factored in the contributions from TAA in our FY12 forecast.
Rating OUTPEFORM
Maintain OUTPERFORM given the potential capital upside of 20% from the current price.
Valuation We are keeping our target price unchanged at RM4.06 based on 13.0x PER of FY12 earnings.
Risks A spike in the average jet fuel price above USD130/barrel in FY12.
Source: Kenanga
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