Friday 29 Mar 2024
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KUALA LUMPUR (April 3): Airasia Bhd's 30% joint venture (JV) in a low cost carrier in Vietnam is a positive development for the group as it will enhance its network within the ASEAN region, according to analysts from Public Investment Bank and TA Securities.

In a research report, Public Investment analyst Nur Farah Syifaa' Mohamad Fu'ad said while the JV would not make material contribution to the group's bottom line in the short term, the research house view the development positively, as this may help to enhance its route connectivity within the ASEAN region.

TA Securities analyst Tan Kam Meng also shared the same view in a report.

"Importantly, the total capital committed to HAA (Hai Au Aviation Joint Stock Company) by AirAsia is only RM67 million or as little as 1% of AirAsia's shareholder funds.

"As such, we think it worth the effort and money to explore Vietnam's aviation market, the 5th largest market in South East Asia after Indonesia, Thailand, Malaysia and Singapore, with a population of 95 million," Tan said in his report.

Last Friday, AirAsia announced that the group has made a shareholders agreement and share subscription agreement with Gumin Company Ltd, Tran Trong Kien, and HAA.

TA Securities noted that Tran is a chairman of Buffalo Tours, a leading inbound tour company in Asia.

The agreement will see HAA increase its paid-up capital to VND1 trillion (RM194 million) for the purpose of the JV operation and AirAsia will subscribe for 30% of HAA's enlarged share capital for VND300 billion (RM58.2 million). AirAsia and Gumin will have their respective interest of 30% and 69.9% in HAA while Tran will hold one share in HAA.

In addition, AirAsia and Gumin also agreed to provide a loan amounting to US$2 million (RM8.8 million) and US$4 million (RM17.7 million) respectively to HAA.

Public Investment maintained its neutral recommendation for AirAsia with a higher target price (TP) of RM3.19. TA Securities, on the other hand, downgraded AirAsia to sell recommendation but maintained its TP of RM3.02.

 

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