AirAsia (BUY)

Announced Surprise Dividend

• AirAsia announced a surprise first and final single tier dividend payment of 5 sen in relation to FY11. This translates into 1.43% net dividend yields.
• We are positive on the dividend payout, as we believe AirAsia has reached a strong and stable growth stage, and in position to better reward shareholders.
• We do not expect the dividend payout (~RM140m) to have any significant impact on AirAsia strong cashflow. Furthermore, AirAsia is likely to realize gains from the listing of its 49% owned AirAsia Thai unit by June 2012.
• We believe this latest development will gradually change investors’ perception that the stock not only has high growth, but also in position to declare dividend, commencing FY10.
• Maintain Buy on AirAsia (TP of RM4.70).

Source: Hong Leong Investment Bank Research - 16 May 2012