AirAsia Group Bhd
(July 30, RM3.51)
Maintain outperform with a target price of RM5.03: AirAsia Group Bhd consolidated operations reported an increase in seat capacity by 4.2% quarter-on-quarter (q-o-q) to 12.7 million, exceeding passengers carried by 2.1% q-o-q to 10.8 million in the second quarter of financial year 2018 (2QFY18). This brings its load factor to decline to 85.5% (versus 89% in 2QFY17). Nevertheless, it is within our expectations, accounting for 50% of our FY18 forecast. During the quarter, one aircraft was added to the fleet size for its Malaysian operation.
Malaysia commenced operation of one new route and increased frequencies on 10 routes (that is, eight from Kuala Lumpur, one from Langkawi and one from Johor Baru). However, its passengers carried marginally declined by 0.2% q-o-q. Meanwhile, the Philippines reported higher passengers carried (+13% q-o-q) with flat load factor q-o-q at 87% as it commenced operations of three new routes (that is, two from Cebu and one from Manila) and increased frequency of one route from Cebu. Despite the low season for its Indonesia operation, it reported a commendable load of 81% (versus 80% in 1QFY18).
Thailand reported lower load factor of 85% in 2QFY18 (versus 91% in 1QFY18), with passengers carried declining 5.8% q-o-q. Meanwhile, India added two aircraft to its fleet size, bringing its seat capacity and passengers carried to increase by 18% and 24% q-o-q respectively. As a result, its load factor jumped by 4.2 percentage points to 87% (versus 83% 1QFY18). For Japan, it reported flat q-o-q passenger load at 79%. During the quarter, it increased flight frequencies from Nagoya, bringing its traffic volume and seat capacity to jump by 10% q-o-q. — PublicInvest Research, July 30