AIRASIA Analysis:-

Excel – http://1drv.ms/1NUhAz1

My View:-

• Higher risk that IAA’s convertible bonds (CB) may not be successfully issued, as the CBs are now being marketed to foreigners rather than the initial target of local Indonesian investors
• FY15 Q2

• In 2Q15, despite registering a flat revenue growth, AirAsia reported a 62% increase in core net profit to RM109m taking 1H15 core net profit to RM262m (+35% yoy).
• Load factor in 2Q15 improved to 80% yoy (+4.6ppt), on aggressive marketing activities. The number of passengers carried grew by 6.8% yoy, however average fares fell by 10% in the absence of fuel surcharges resulting in a 5% drop in revenue/ASK (RASK). CASK fell by 11% yoy on lower fuel costs. For 2H15, AA has hedged 51% of its fuel requirement at US$84/barrel.
• Contribution from associates more than doubled in 2H15, mainly attributed to higher earnings from Thailand AA (45%-owned). TAA registered a net profit of THB374m (2Q14: loss of THB318m). TAA’s RASK improved by 5% while CASK fell by 10%.

• The continued weakening of the Ringgit against the US$ which is on average 12.7% lower compared to FY14. ~70% of operating expenses and 80% of debt are US$ denominated. AirAsia’s US$ debt hedges are at 73% utilising a combination of natural and derivative hedging. Meanwhile, ~8% of operating costs are hedged to reduce the impact from USD/MYR volatility.
• Positives:

• A more rational market with further yield recovery
• Capacity management to reduce costs
• Better ancillary income.

• I am still worry about AIRASIA, but I believe AIRASIA will be able to go through these issues.

Latest Financial – Q2 2015 Financial Report (26 Aug 2015)http://www.bursamalaysia.com/market/listed-companies/company-announcements/4846625

At the time of writing, I owned shares of AIRASIA.

https://lcchong.wordpress.com/2015/09/01/airasiafundamental-analysis-1-sep-2015/