CIMB Research raises target price for AirAsia Group to RM3.56

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KUALA LUMPUR (Sept 3): CIMB IB Group Research has maintained its “Hold” rating on AirAsia Group Bhd (AAGB) at RM3.44 with a higher target price of RM3.56 (from RM3.52) and said AAGB’s 1H18 core net profit (CNP) of RM533 million outperformed expectations as it made up 65% of house previous full-year forecast, due to a large 2Q18 drop in depreciation.

In a note Sept 2, the research house said the drop in depreciation is related to the cessation of depreciation for aircraft on the leasing portfolio being sold to BBAM (for subsequent lease-back).

It said the group’s core airline operations outperformed expectations by circa 10%, as Philippines AirAsia did not do as poorly as forecasted, albeit Malaysia AirAsia, Indonesia AirAsia and Thailand AirAsia were weaker than expected.

“We maintain Hold, with a slightly higher target price of RM3.56, still based on CY19F P/E of 12x (sector average), and adding expected special dividends of 82 sen,” it said.