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Wednesday, August 24, 2011

Broadly in line; maintain OUTPERFORM (CIMB)

AirAsia’s 2Q11 performance was above our preview, with core net profit at RM178m (Malaysia: RM152m, associates: RM26m) against our preview of RM145m (Malaysia: RM115m, associates:
RM30m). But after adjusting for a RM22m incentive credit from MAHB, the results are broadly in line. Strong demand and load factors helped keep AirAsia profitable despite higher fuel prices and competition from Firefly. We maintain our OUTPERFORM rating, EPS forecasts and target price of RM4.70, still pegged to 10x core P/E. AirAsia’s yields will benefit from Firefly’s exit from the domestic LCC business and MAS’s exit from certain Asean routes. AirAsia is also building new ventures in Japan, the Philippines and Vietnam while Thai AirAsia and Indonesia AirAsia are targeted for listing in 4Q11-1Q12. These are all potentially major share price catalysts.

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