Expect FY13 core net profit to be within our new MYR651m forecast, a decline of 20.4% from the previous year.

Weak yields have more than offset the positive impact of strong load factor and lower unit cost.

Maintain BUY, with an unchanged target price of MYR2.80 pending an analyst briefing post the results announcement.

What’s New

The upcoming 4Q13 and FY13 results on 26th  Feb will be weak, and below consensus by 10.3%, in our view. This will however be within our below-consensus forecast. We believe the results will show signs that the industry has reached a bottom and that first signs of a recovery are at hand.

What’s Our View

AirAsia has done a good job in fending off the additional competition by deploying modest capacity growth and tight cost control. It has also achieved a load factor of 85% for its Malaysian operations in 4Q13, its first in history. However, yield declines were inescapable and 9M13 core profit fell by 15.5% YoY.

We have tweaked our earnings forecasts to take into account the latest operating statistics, fleet growth guidance by management and changes to our USD:MYR assumptions. Our FY13-15 forecasts are revised up by 5.5% / 4.5% / 5.3%.

Maintain BUY with an unchanged target price of MYR2.80, based on 10.5x FY14 PER, which is on par with global LCC average. We await the post results analyst briefing before making any adjustments to our fair value estimate.  

Source: Maybank Research - 17 Feb 2014