Yesterday, AirAsia announced its 1QFY17 preliminary operating statistics, delivering strongest load factor at 88.9% (+3.3pts YoY). Its traffic volume saw a 8.5% YoY growth to 18.2bn revenue-passenger-kilometres (RPKs) on the back of an increase in passengers carried by 9.3% YoY. For its Malaysian operations, the operational numbers were within our expectation, with strong passengers’ load recorded at 89.7%. AirAsia is scheduled to release its 1QFY17 results and passenger yield data on 25 May 2017. We maintain our Neutral call on AirAsia with target price of RM3.19 pegged on 8x FY18F EPS.

• Malaysia (MAA) operating statistics. Malaysia AirAsia (MAA) reported an increase in passengers’ carried by +5.8% YoY to 6.84m, although its seat capacity increased marginally by +0.7% YoY to 7.63m. These were within our expectations, accounting for 24.2% and 23.7% of our FY17 forecast respectively. Although its available-seat kilometres (ASK) was flat YoY, its revenue-passenger-kilometres (RPK) increased by +4.2% YoY to 8.9bn due to additional route frequencies. Meanwhile, passenger loads was the strongest so far at 89.7% during the quarter. (Table 2).

• Associates’ performance. Thailand (TAA), Philippines (PAA) and India (AAI) remained strong with load factor at an average of 90% level. For Indonesia (IAA), its performance remains stable at 82% load compared to 79.5% in 1QFY16, despite a capacity reduction of 6.8% YoY.

• Pending more details on yield data and results for 1QFY17, we maintain our Neutral call on AirAsia with a target price of RM3.19 pegged on 8x FY18F EPS.

Source: PublicInvest Research - 2 May 2017