Well... Cut the long story short....

Not far from HLBs analysis....



Maintained BUY with TP of RM3.11 based on unchanged 10% discount to SOP.




HLBank Research Highlights
Author: kltrader | Latest post: Thu, 28 May 2015, 10:20 AM

This blog publishes research reports from Hong Leong Investment Bank

Blog Headlines (by Date) Blog Index

AirAsia - 1Q15 will be a pleasant surprise!
Author: kltrader | Publish date: Wed, 27 May 2015, 10:21 AM

Highlights/ Comments

AirAsia 1Q15 results will be on 28th May 2015 and we expect the results to be within our expectation of net profit of around RM125m – RM135m for this quarter.

To recap the highlights in 1Q15;

o AirAsia Indo flight QZ8501 crashed in the Java Sea on 28th December 2014, affecting air travels sentiments towards AirAsia group. As a result, AirAsia halted their marketing activities during the first half of 1Q15 as a sign of respect.

o Lower jet fuel at average of US$67/bbl (50% YoY). AirAsia Group has announced the removal of fuel surcharge for bookings from 26th January 2015 onwards.

o Disposal of 25% stake in Expedia (from 50% ownership) for cash consideration of USD78.5m in 1Q15. We expect a disposal gain of RM280m from the exercise.

For 1Q15, we expect improvement in average yield (revenue/RPK) to 11.45 (+7% YoY; -5% QoQ). Lower average yield for QoQ was due to lower marketing campaigns (post QZ8501 incident) and discontinuation of fuel surcharges . Ancillary income expected to remain relatively flat QoQ at 44.21/pax.

Stronger contribution from associate Thai AirAsia. Thai AirAsia (Known as Asia Aviation) revenue grew by circa 20% YoY driven by an increase of 19.4% passenger carried. Core PATAMI grew exponentially to THB498m for 1Q15 from THB75m for 1Q14. (Due tourism recovery from Thailand military coup and plugged of Jet fuel price). Note that AirAsia does not recognize contribution from other airline JVs/associates.

On the cost structure, we expect average cost to go down by 6.6% YoY to 839.4m, mainly due cost savings from the lower effective jet fuel price of US$83/bbl (RM284.69/bbl). Hence, based on our forecast, AirAsia Core Net profit would be around RM125m – RM135m for 1Q15.

Risks
World crisis (ie. war, terrorism and epidemic outbreak); surge in jet fuel price; US$ appreciation; weak air travel demand; and high speed train infrastructure between Singapore and Pulau Pinang.

Forecasts
Unchanged

Rating
Buy

Positives

1) Sustaining lowest cost LCC operator in Asia with largest network and strong brand name; 2) Low jet fuel price; 3) Increasing ancillary income; and 4) Routes rationalization of major competitor MAS.
Negatives

1) Higher cost of living faced by consumers (from GST implementation); and 2) Regional air-demand slowdown and political issues.
Valuation



Maintained BUY with TP of RM3.11 based on unchanged 10% discount to SOP.




Source: Hong Leong Investment Bank Research - 27 May 2015

you know..... you know the one you have in the freezer is a crap... when people are embarrassed to even admit that they have it....

All you who are loyal here who have waited for 1+ year..... time flies... can you believe it... it has been more than 1 year since BI RI... patient lot you all... continue to be so ler ;)

Big unrealised FX loss will be there

Core operating profit will be there......


Another way AirAsia is complicated is that.... you don't know how the shareholders will react... so far not always right

Let down after let down.... after let down

AZRBs quarterly results have been so freaking disappointing for so long that nobody cares anymore....

A positive surprise for once would be nice....

Going by what is happening in the other side... and if my still half asleep and not even using a calculator calculation can be relied upon.... AirAsias unrealised FX loss is gonna be around 800m...

Feel free to panic sell

Pandai....

1Q result out tomorrow... today up... ain't it a good sign?

The window to buy cheap from Tony Kamarudin Tune A... has more or less closed

But..... low jet fuel price will prevail... if not in the immediate term... in the mid term to long term.. low jet fuel price will prevail..

Air tickets prices will be so low in future that Everyone + the mother in law + her car can fly.... with AirAsias margin still good

AirAsia is very complicated



Operating in so many countries

Have shareholders from all over the world



AirAsia is sum of parts... sum of so many moving parts.... so so many many moving parts.... that can go wrong... that can go right.... pulling and pushing from all directions

Or... 28th could well be planned for something special... like the closing date of AAXs RI..

Well... 28th could well be the most auspicious day to release quarterly result this May... after the shit in Indon dont be surprised if Tony has in fact consulted the numerology... Modern Indian that he may be..

Complicated..... Complicated.... AirAsia is the most complicated company that I have put my money in

Last two years on 20th... now 28th... suspicious people will read a lot into the few days delay ler

Thought 1Q results on the 28th??

HaHa... based on price and volume actions... it does look like we are going to die a violent death

AirAsia has planned to do sale and lease back of its planes....


The planes will be sold in USD.... as such a natural hedge against its USD loans

No heavy selling in big lots today upto now.... the window for you to get some AirAsia cheap from Tony Kamarudin via Tune Air..... while still open...... but is closing closing closing.....




r°Moi Foreign funds have been selling for awhile now ....

Tune Air has not been selling from the beginning of this year.... as there have been no such announcement




But ..... I am 99% sure Tony Kamarudin via Tune Air are involved in the selling in the recent weeks.....




Question is.... are they selling because of..


a) lousy... no not lousy.. lousy can't explain the speed and depth of the selling..... not lousy but terrible.. horrendous.. very very terrible 1Q results?


b) they have fires elsewhere to put off?? Hint: errrrrrr... not likely to be bailing out 1MDB.... could it be AAX?




I personally think b).....

24/05/2015 14:32

Posted by r°Moi > May 22, 2015 04:29 PM | Report Abuse X


..with the next support levels anticipated at MYR2.05, followed by MYR1.81.

GST was effective from 1-4-2015... by now those big companies which have to submit on monthly basis would have got their 1st GST 03 ready.... and got it done easily without problem... and realised that fhey really do not need IFCA as much as they have thought...


And with that... there goes IFCAs prospect of having recurring income on GST... GST is more likely a one off than not...


People in the know selling... CFO leaving... at the peak of IFCAs good run????

There are other factors.. not directly related to AirAsia... at play at the moment ....


Do be careful

The one thing that may mess up AirAsias figures again would be the USD...

31. Borrowings and debt securities

RM.... At 31/12/2014
Current 2,274,928,000
Non-current 10,453,090,000
Total Debt 12,728,018,000

As at 31/12/2014, AirAsia has RM 12.7 billions loans of which approximately 85% was in USD and 50% if this was hedged per its risk management policy

However, out of this only RM 2.2 billions were current ie due within the next 12 months... and the current portion is the only portion where the forex risk is a "clear and present danger" which should be managed by hedging to reduce the forex risk exposure.

The rest amounting to RM 10.5 billions was long term with due date ranging from 2 years upto 14 years, as such, need not be hedged at all as its forex risk exposure is neither "clear" non "present" at all.




The point is the only portion that will really impart on the income statement and cash flow is the current portion at only RM 2.2 billions.




The forex translation gain/loss of the non current portion is really only in paper... and will swing from gain/loss throughout its tenure of upto 14 years. The CEO has said this is just a mere accounting entry.... you understand????

According to results....

Aircraft fuel expenses for 2014: 2,254,237,000

Say, fuel consumption remains more or less the same and say, the average jet fuel price has dropped a mere 25% (vs 50% for crude.. easier la like this no need to really know how many % is hedged at how much... a drop of 25% is reasonable)


So... 2,254,237,000 × 25% = 563,559,250 ie saving for 2015 roughly

The saving due to low fuel price for 2015 would be RM 563,559,250.... a bloody big figure no matter how you look at it

Foreign funds have been selling for awhile now ....

Tune Air has not been selling from the beginning of this year.... as there have been no such announcement




But ..... I am 99% sure Tony Kamarudin via Tune Air are involved in the selling in the recent weeks.....




Question is.... are they selling because of..


a) lousy... no not lousy.. lousy can't explain the speed and depth of the selling..... not lousy but terrible.. horrendous.. very very terrible 1Q results?


b) they have fires elsewhere to put off?? Hint: errrrrrr... not likely to be bailing out 1MDB.... could it be AAX?




I personally think b).....

bintang2...


can roughly explain how the pegging by hedging work??

In particular whether AirAsia takes delivery of physical jet fuel or not???

1.50... is this what your kelapa muda hijau predict ka?? HaHa

Singapore is a world financial center... where all the bankers that matter are there.. this crap will not go unnoticed...

God bless

If Hudud is the law now... all these peoples' tongues would be stoned to death

Ya.. you got it... precisely...

Gave a bull bank statement... tried to buy time to do amend... not successful.. you know.. junk how to convert to cash?

The period between the March 10 and May 20 announcements in Parliament would by any measure be construed as a period when there was a massive cover-up.




If admission it is just "units" not cash was made just now....... you know... after all efforts and attempts had been made feverishly to convert the "units" to cash within this period had failed... then God bless rakyat Malaysia...

................. but this is drastic

so I am gonna get some......

Tony and Kamarudin already said they will sell................. but this is drastic

Not EPF la.... Tune selling

Looking at it now I am pretty sure part of fhe selling is by Tony and Kamarudin

It is a funny feeling... you worry it will go down too much... you worry it will go up too much... all at the same time....

..with the next support levels anticipated at MYR2.05, followed by MYR1.81.

Waiting big at 2.00.... come on come on!!!

Ya... they are copied from the quarterly reports

What misunderstanding??

r°Moi Dangerous is.... dont know who are selling....

wah..... 11MP effect comes early....

AirAsia has lost all its investment in IAA and PAA.... ain't this a shocker??!!

rizer

Are you ready??



The Group’s interest in Indonesia AirAsia has been reduced to zero and the Group will only recognize its share of profits after its share of profits equals the share of losses not previously recognized.


The Group’s interest in AirAsia Philippines has been reduced to zero, in accordance with MFRS128, any profits will only be recognized when a total of RM102.5 million of unrecognized losses have been reversed.



Besides speaking English I was speaking a bit of technical ler


Understand??

If the translation of long term USD loans FX loss is taken as part of normal operating expense... then maybe

Anyway.. WTF just a few days more we will all know....

rizer

See this ; ) .. that means it is meant to be a joke

AirAsia only hold 326.13m shares (13.76%) in AAX... 3 RI + 2 W for 4 at 0.22 per share AAX is not much of a problem la... and with the W... worst is beakeven la

Tony and Kamarudin have 798.65m shares (33%) in their baby AAX.. they will do the bailout if necessary... and like I have said before when AirAsia has tons of cash later... there could well be a special dividend payout to them to help them finance AAX... special dividend is good for you and me.. just take it without asking a lot of questions ; )




O... You don't know why.. "As at now.... IAA.. PAA... don't matter to AirAsia's results" ??

O... then this may come as a shock to you..... give you a bit of time to prepare yourself first.... tell you later

Biz model is ok la..................

You go over to AAX house and praise Tony like this.... you will get 200 rotten eggs on your face................ ; )

Foreign funds in AAX are leaving without saying goodbye... in a rush

KUALA LUMMPUR: Foreign funds were quick to take profit on Bursa Malaysia on Tuesday with net selling at -RM158.5mil, according to BIMB Securities Research.


KUALA LUMPUR: Malaysia’s ringgit fell the most in almost two weeks as the dollar rallied before the Federal Reserve issues the minutes of its April meeting, which may shed more light on when it will raise interest rates.


RM vs USD... weakening further...................

KUALA LUMPUR: Malaysia’s ringgit fell the most in almost two weeks as the dollar rallied before the Federal Reserve issues the minutes of its April meeting, which may shed more light on when it will raise interest rates.