News AirAsia announced that it has entered into a Conditional
Share Sale Agreement together with its partner PT Fersindo Nusaperkasa to
acquire PT Metro Batavia for a total consideration of RM254.0m. AirAsia will
hold a 49% stake in Metro Batavia (Batavia), Indonesia for a price consideration of RM124.5m while the
remaining 51% majority stake would be held by its Indonesian partner PT
Fersindo Nusaperkasa. Batavia is a full service carrier (FSC) airline operating
from Jakarta Soekarno-Hatta International Airport, Jakarta.
Comments We are neutral on this news as we believe
that the acquisition will allow AirAsia to tap into the Indonesian domestic
market and collaborate with Indonesia AirAsia (IAA) through IAA’s existing international
market penetration.
Assuming a 70:30 debt-to-equity ratio, AirAsia will have to
gear up by RM87.1m for the acquisition which will increase its net gearing
higher to 1.27x from 1.26x (based on
1Q12 numbers).
Batavia is a FSC airline that service 2 main markets i.e.
Asia and Middle East. It is currently operating 35 aircrafts with an average
fleet age of 12 years. Most of the aircrafts are B737s with 2 A330s.
Batavia holds about a 16% to 18% share of the Indonesia’s
domestic market and it is a small player for international market.
AirAsia is likely to revamp Batavia’s fleet within the next
3 years after it streamlined Batavia’s new routes and business direction or
even change its entire business model to low cost carrier (LCC).
Outlook We do not
see any unfavourable competition between Indonesia AirAsia and Batavia in Indonesia as both are catering
to different market segments in Indonesia.
With the acquisition of Batavia, AirAsia will be able to leverage
on Batavia’s existing domestic customers to penetrate the local market faster
while feeding Batavia with its international passengers via IAA.
Forecast There
are no changes in our forecasts for FY12 and FY13 at this juncture. We do not
expect AirAsia to equity account for its 49% stake in Batavia immediately.
Based on various news reports, Batavia registered USD6m to USD7m in 2007. There
were no further financial details available at this juncture.
Rating Maintain
OUTPERFORM
It offers approximately 10% upside from here.
Valuation There is no change in our Target Price of
RM4.06, which is based on 13x PER of FY13 earnings.
Risks A spike in
fuel price above USD130/barrel.
Source: Kenanga
No comments:
Post a Comment