By P PREM KUMAR & DASHVEENJIT KAUR
AirAsia Bhd plans to dispose of two non-core assets in the next four months as buyers have been identified, with the low-cost carrier now working out the fine details, said group CEO Tan Sri Dr Tony Fernandes.
“I anticipate we will dispose not one, but two assets by the end of this year,” he told The Malaysian Reserve in a recent interview.
“We are expecting huge returns from the sale,” he said, adding that the carrier now owns stakes in three non-core assets.
The assets likely to be on offer are AirAsia’s leasing arm Asia Aviation Capital Ltd, its 25% stake in AAE
Travel Pte Ltd — a joint venture (JV) with Expedia Inc — and the airline group’s 50% stake in training centre Asian Aviation Centre of Excellence Sdn Bhd, a JV with Canadian train- ing simulator CAE Inc.
The leasing unit was reported to be in the priority list for a sale, with valuation forecast at US$1 billion (RM4.28 billion).
AirAsia made a 20-fold return on investment when it disposed half of its shareholding in AAE (to 25%) in 2015 for RM306.2 million. Meanwhile, Fernandes said the valuation on AirAsia and AirAsia X Bhd on Bursa Malaysia does not reflect their potential.
“I cannot decide on the share price, but as a shareholder myself, I think the price is very cheap,” he pointed out. For instance, Fernandes said AirAsia should be traded at RM5-RM6 per share, based on current earnings, profile and prospects.
In the last 52 weeks, AirAsia share price has been trending between RM2.16 and RM3.59. It closed at RM3.29 last Friday.
AirAsia X traded between 35 sen and 55 sen in the past year. It settled at 38 sen last Friday.
“The current share price pushes us to work hard and convince the rest of the shareholders and potential investors.
“The market will price it as it will, so we have to convince the market that we have a value there…some investors are already beginning to see the growth,” said Fernandes.
In AirAsia Group’s second- quarter of 2017 (2Q17) preliminary operating statistics, it reported an increase in traffic volume by 4% quarter-on-quarter (QoQ) to 18.9 billion revenue-passenger-kms, while load factor declined 1.2 points QoQ to 87.7%.
AirAsia’s consolidated operations reported an increase in passengers carried by 5.1% QoQ to 9.6 million, as its seat capacity increased 5.5% QoQ to 10.8 million in 2Q17.
In a research note, Public Invest Research maintained its forecast and ‘Neutral’ call on AirAsia, with a target price of RM3.19.
“Although there was no addition to aircraft QoQ, we understand the increase in passengers and seat capacity were due to strong demand in air travel during the period, coupled with the introduction of a few new routes and increased frequencies by all three operators in Malaysia, Indonesia and the Philippines,” the research house said.