About Airasia X.. cont'

Looking at its financial year ended Dec 31 2012 figures, the PE multiple is about 11.1 times based on its net profit of rm33.85 million for FY2012 and current outstanding shares of 266.67 million. Compare this to Airasia Bhd’s FY2012 PE multiple of 10.6 times and it appears that the medium haul low cost carrier commands a higher valuation versus its more established sister airline, Airasia.

There is also a dilution in NTA per share to retail and institutional investors but an increase for existing shareholders post IPO. Based on an enlarged share capital of 2.38 billion shares, its pro forma consolidated NTA per share as at Dec 31 2013 would be rm0.59 representing an increase in NTA of 20 sen to existing shareholders but dilution of 86 sen of the retail price of rm1.45. The audited NTA per share as at Dec 31 2012 stood at rm0.390.

Airasia X states that the offer price of rm1.45 per is based on its financial performance and operating history …

Meanwhile industry observers opined that the PE may not be necessarily relevant because this is very high growth company although there is no guidance in terms of profit forecast. Example is Airasi when it went for IPO, it did not have earnings and 90%.

Going by the company’s past performance, it has not had an impressive track record in terms of profitability.

It posted a net profit of rm146.6 million in FY2010 on the back of rm1.29 billion revenue but plunged into the red with a net loss of rm96.7 million in FY2011 despite recording higher revenue of rm1.86 billion.

It was also making a net loss of rm29.1 million for the six months ended June 30 2012 but managed to turn around in a short span of six months with a net profit of rm33.85 million on the back of rm1.97 billion in revenue in the full FY2012 results. Its better FY2012 revenue was mainly due to substantial increase in fuel surcharge to rm148.23 million from rm44.43 million a year ago while ancillary revenue rose to 18% to rm364 million.

For the three months ended March 2013, Airasia X posted an increase in net profit to rm50.2 million from rm48.5 million a year ago.

Airasia X expects to raise up to rm1.3 billion from its IPO.

Investors are puzzled as to why Sir Richard Branson’s Virgin Atlantic Airways Ltd sold its 10% stake in Airasia X for rm66 million in 2012 if the airline is on the high growth road.

Airasia Bhd had on May 10 2013 converted all its outstanding 42.67 million redeemable convertible preference shares into ordinary shares. It had also stated in Oct 2012 that it would not exercise its option, which expired on Oct 28 2012 to purchase a stake in Airasia X. The airline explained that it wanted to focus its resources on its short haul business and use its capital to exploit opportunities in Asia.