Positive on AirAsia’s completed listing of Indonesian airline
KUALA LUMPUR: Analysts gave two thumbs up to Air Asia Bhd (AirAsia) completing the listing of its Indonesian arm, Indonesia Air Asia via a reverse takeover exercise with PT Indonesia Air Asia.
This was pursuant to the latter’s acquisition of a 57.3 per cent stake in Indonesia AirAsia.
PT Indonesia Air Asia recently raised RM1.1 billion via rights issue. Prior to the acquisition exercise, it recently completed a rights issue, raising 3.4 trillion rupiah or RM1.1 billion, while at the same time divested its coal trading and transportation business for 26 billion (about RM7.8 million).
MIDF Amanah Investment Bank Bhd noted that AirAsia Investment Ltd (AAIL) continues to hold a 20.95 per cent direct interest in Indonesia Air Asia.
“Following the transfer of Indonesia Air Asia perpetual securities amounting to 1.3 trillion rupiah to PT Indonesia Air Asia, this transaction translated into 47.7 per cent shareholding ownership in the listed PT Indonesia Air Asia,” it said in a note yesterday.
The rationale of Indonesia Air Asia’s listing is to support the financing needs of Indonesia Air Asia through rights issue or private placements.
It also helps unlock the value of AirAsia Bhd’s investment in Indonesia Air Asia Improve the visibility and transparency of IAA Enlarge funding by tapping into the Indonesian equity market.
“Indonesia Air Asia’s listing on the IDX would allow it to tap into the Indonesian equity markets for funding,” the research house added. “We opine that this would reduce its reliance to AirAsia.
“At the same time, it would also allow AirAsia to unlock the value of IndonesiaAir Asia as a listed entity. We note that the listing of IAA followed the listing of AirAsia business entities in the stock markets in Malaysia and Thailand.”
Following this, the management indicated that the listing of its Philippines arm will possibly take place in FY18.
“As we are positive on the news, we maintain our BUY recommendation for AirAsia. Our TP derived from a forward price-to-earnings ratio of 10x FY18 EPS.
“We like Air Asia because of the company continuous efforts to reinvent itself, introducing new digital offerings to ensure that it stays relevant in a highly competitive industry.
“Air Asia remains our top pick for the aviation sector, predicated on stable demand growth with conservative ASK expansion of 10 per cent; new areas of growth in Air Asia India and Air Asia Japan.”
Following the transfer of Indonesia Air Asia perpetual securities amounting to 1.3 trillion rupiah to PT Indonesia Air Asia, this transaction translated into 47.7 per cent shareholding ownership in the listed PT Indonesia Air Asia. MIDF Amanah Investment