KUALA LUMPUR (Oct 31): CIMB Investment Bank Bhd raised its AirAsia Bhd share target price to RM3.67 from RM3.51 to include the budget airline's potential higher dividend at RM1.27 a share.

The higher dividend is in anticipation of AirAsia receiving cash proceeds of RM372.2 million (11 sen/share) from the proposed sale of AirAsia's 38.6% stake in wholly-owned subsidiary Ground Team Red Holdings Sdn Bhd (GTRH) to Singapore-listed SATS Ltd.

GTRH is the investment holding entity for AirAsia's airport service businesses. SATS provides ground handling and in-flight catering services in Singapore.

CIMB analyst Raymond Yap wrote in a note today: "We are positive on AirAsia's JV (joint venture) with SATS, as AirAsia will gain exposure to the ground handling operations of Changi Terminal 4, which currently serves six airlines."

Yap said CIMB maintained its "add" call for AirAsia shares. At 11:38am, AirAsia shares were traded at RM3.31.

Public Investment Bank Bhd said it views the AirAsia-SATS JV "positively" as the move will help AirAsia realise the underlying value of its non-core assets and improve its cash flow.

"We view the disposal positively given the unlocking of value and realisation of gains from the disposal of non-core assets within the group. We maintain our forecasts and Neutral call on AirAsia however, with target price of RM3.19 pegged on 8x FY18F EPS," Public Investment analyst Nur Farah Syifaa' Mohamad Fu'ad said.