Friday, August 23, 2013

AirAsia : Lower yields (DBSV)

AirAsia
HOLD RM2.98
KLCI : 1,744.85
Price Target : 12-month RM 2.90

Lower yields
2Q13 core net profit below expectation
Yields lower with intense competition from regional and domestic carriers
Cut FY13F net profit following weak 2Q13 results
Maintain HOLD rating and RM2.90 TP

Highlights
Weak 2Q13 results. AirAsia booked RM94.6m core net profit (- 5.8% y-o-y; -31% q-o-q), taking 1H13 core profit to RM232.2m (+6.7% y-o-y), below our expectation. The key variance against our forecast was lower than expected yields.


On a y-o-y basis, AirAsia Malaysia registered stronger passenger growth of 12% in line with 12% capacity growth, which resulted in a 4% increase in turnover. Ancillary income per passenger grew 6% but this was offset by lower average fares (which fell 10% to RM159) under intense competition which resulted in lower yields of 11.47 sen (-18% y-o-y). Net profit was weighed down by higher staff costs (+10%) and higher maintenance and overhaul costs (+9%), but was helped by lower fuel costs as average fuel prices fell 8%.

One-off items this quarter include RM78.3m gains from disposal of Japanese operations and forex losses on borrowings of RM122.7m (+26% y-o-y).

Thai AirAsia flying high. Income from associates was RM22m versus RM1.7m loss a year ago, led by Thai AirAsia (TAA). TAA’s net profit jumped 203% y-o-y driven by strong growth in capacity (+20%) and passengers carried (+25%).

Our View
Yields under pressure. Although we expect 2H13 earnings to be stronger, we cut FY13F net profit by 9% following the weak 2Q13 results. Despite some positive signs in the Group’s operations, yields are under pressure. With MAS and Malindo Air sacrificing yields in favour of load factor, average fares could drop further.

Recommendation
Maintain HOLD. Our RM2.90 TP is pegged to 9x FY14F EPS. Near term outlook remains challenging with rising competition and declining yields.




Source/Extract/Excerpts/来源/转贴/摘录: DBSV-Research,
Publish date: 22/08/13

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