KEY INVESTMENT HIGHLIGHTS

• Bulk of non-airline ancillary contributed by Teleport

• Expansion plans at existing warehouse at LLCT in Sepang would enable Teleport to capture growth in Southeast Asian cargo

• Beneficiaries of Teleport’s platform and network not limited to SMEs but also online sellers

• Earnings estimates revised to incorporate higher utilization of Teleport’s business

• Maintain BUY with a revised TP of RM2.12 per share

Teleporting to better growth in freight services. Recall, in 1HFY19, the +17.8%yoy increase in AAGB’s passengers contributed to higher 1HFY19 ticket sales of +18.6% to RM4.4b. This also resulted in airline related ancillary income revenue to grow by +12.8%yoy. After including non-airline ancillary segments such as Teleport, Airasia.com, RedBeat Ventures and Bigpay, total ancillary grew by +40.3%yoy. Most of the contribution for non-airline ancillary revenue came from Teleport, AAGB’s logistics arm at more than 50.0%. Teleport, has established presence in 6 countries (Malaysia, India, Thailand, Indonesia, the Philippines and Singapore) covering 85 cities. It also currently signed agreements with Air New Zealand and Oman Air to expand and provide market access for its cargo business.

Source: MIDF Research - 1 Nov 2019