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Friday, November 11, 2011

AirAsia (OSK)

AirAsia (AIRA MK, BUY, FV: RM5.18 (unchanged), Last Close: RM3.77) AirAsia hosted an Ancillary Day event to the investment community yesterday which was well attended by over 70 participants from around the world. With its various ancillary initiatives in the immediate-medium term by banking on its goldmine user/fan base and branding asset, AirAsia intends to drive its per pax ancillary revenue further. Of which the low cost carrier is targeting to grow it to RM60-RM65 per pax over the next few years. We have conservative ancillary revenue targets for AirAsia, which is forecasted grow by low double digit of 11%-12% come FY12-FY13 though we note that this again could continue to surprise on the upside next year. With valuations currently trading at a discount of 30% and 17% on AirAsia’s FY11 and FY12 earnings, we reaffirm our BUY on AirAsia with our fair value unchanged at RM5.18 premised at 12m rolling EPS of 12x.

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