Mixed views on AirAsia’s cor­po­rate re­vamp, earn­ings

The Sun (Malaysia) - - SUNBIZ -

PETALING JAYA: An­a­lysts are mixed on AirAsia Bhd’s (AAB) cor­po­rate ex­er­cise and earn­ings per­for­mance for the first half of the year ended June 30.

HLIB Re­search main­tained a BUY call on AirAsia’s shares at a higher price tar­get of RM4.10 (from RM3.82) on the back of ex­pec­ta­tions for sea­son­ally stronger earn­ings in the sec­ond half of the year.

The re­search house also ex­pects a stronger load fac­tor in the sec­ond half due to strong de­mand and sus­tain­able yields. Its fuel re­quire­ment is also ex­pected to be hedged at US$60 per bar­rel.

On top of that, AirAsia is ex­pected to gain from the cor­po­rate ex­er­cise and the dis­posal of its Asian Avi­a­tion Cen­tre of Ex­cel­lence Sdn Bhd for RM429.30 mil­lion.

PublicIn­vest Re­search main­tained a NEU­TRAL call on AirAsia at a price tar­get of RM3.19.

“Upon com­ple­tion, there will be no sig­nif­i­cant changes to the ef­fec­tive share­hold­ings in IAA by AirAsia, which is up to 48.4% (cur­rently hold­ing 49% of IAA). In ad­di­tion, there will be a to­tal one­off gain of about RM230.4 mil­lion in FY17, owing to re­ver­sal of IAA’s im­pair­ment in AAB of RM207.5 mil­lion, as well as forex gain of RM22.9 mil­lion, this how­ever sub­ject to ap­provals be given for the trans­ac­tion. We view the list­ing as pos­i­tive as it should pro­vide fi­nan­cial flex­i­bil­ity to IAA to pur­sue growth,” PublicIn­vest said.

“We un­der­stand that IAA is par­tic­i­pat­ing in the In­done­sia Tax Amnesty Pro­gramme, which IAA will no longer be li­able for any tax li­a­bil­ity prior to FY16, whilst the ex­ist­ing de­ferred tax as­set in IAA’s book prior to FY16 will also no longer be de­ductible against future prof­its,” it added.

HLIB also said it ex­pects no sig­nif­i­cant im­pact on the group’s earn­ings and share­hold­ings from the cor­po­rate ex­er­cise which is ex­pected to be com­pleted in the first quar­ter of FY2018, as it is pend­ing the ap­proval of reg­u­la­tors and share­hold­ers.

Mean­while as an­a­lysts agreed that the group’s core net profit came within ex­pec­ta­tions, they dif­fered on the quan­tum of the core earn­ings.

PublicIn­vest Re­search said the core net profit for the first half stood at RM775.70 mil­lion whereas HLIB Re­search said the earn­ings for the first six months were at RM667.60 mil­lion.

AAB shares fell one sen to RM3.32 with 26.7 mil­lion traded yes­ter­day. It has a mar­ket cap­i­tal­i­sa­tion to RM11.1 bil­lion.

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