• AAGB sold remaining 25% stakes in AAE Travel to Expedia

• Pocketing one-off gain of RM181.6m

• Moving forward, focus will be on ‘unicorn’ products

• POSITIVE on the news

• Maintain BUY call at unchanged TP of RM4.87

The group extended its divestments of non-core assets with the sale of remaining 25% stakes in AAE Travel to Expedia. Following the acquisition by Expedia, the group is expected to record a gain of RM181.6m (RM230.4m at company level) in 3QFY18, with a price tag of RM240m. Accordingly, the sale marked the divestment of the airlines’ last non-core investment from previous joint ventures (please refer to the list below of other divestments).

AAGB Monetising of Assets:

1. AACE-Sold 50% with cash proceeds of USD100m mid-Nov 2017

2. GTRH-Sold 38.6% with cash proceeds of SGD119.3m in Jan 2018

3. AAC-Sale of USD1.2b announced on 1 March 2018

4. AAE Travel -Sold 25% to Expedia for RM240m cash

The JV was established in 2011, as part of AirAsia’s venture into the online travel agency business. It was part of the group’s approach to offer a complete range of flights, hotels and holiday packages. The plan was strategic, with synergies formed to provide a seamless travel access to its customers. Since inception, the JV has provided platform to build the group’s mobile apps, offering attractive app-only deals and bundled package savings.

Divestment open ways for new growths. The rationale for the stake sale is part of its monetization plan of non-core assets. Apart from reducing debt, the proceeds will be utilized for the group’s working capital whereby its products namely BigPay, Travel 360 and Redbox Logistics will be given priority.

Source: MIDF Research - 15 Aug 2018