Airasia X prospects'

Target Price: 1.65 (RHB), 1.47 (CIMB), 1.33 (Alliance), 1.66 (Inter-Pacific)

Its strengths lie in two critical elements: operating the lowest possible cost and churning up high passenger volume.

What AAX lacks however is the scale to emulate the success of sister company, Airasia. Hence the IPO is taking this long haul LCC to its next stage of growth during which it will enlarge its fleet and achieve the scale it needs to propel earnings.

The airline has picked Bangkok as its new hub, in tandem with its vision to be a leading long haul LCC. Together with other carriers in the Airasia group, it is working towards building the world’s first multi hub long haul LCC network.

Meanwhile the near-term share price performance may be affected by seasonally weak 2Q and 3Q results as well as concern over the effect of delay in the opening of KLIA2 on its expansion plan.

Moving forward, the company’s rising economies of scale owing to fleet expansion should further pare down unit costs.

By learning its past mistakes, it had built a solid base in KUL and a business model that can be successfully replicated across several hubs.

Ra rating catalysts are aggressive expansion of its profitable KUL hub and the opening of new hubs in Bali and Bangkok.

It has superior unit costs that help it build new demand with cheap fares and eat into FSC’s market shares, leveraging Airasia Group’s short haul networks.



It is worth nothing that Maybank is the stabilising manager for the initial public offer (IPO) of Airasia X Bhd. The maximum period for the price stabilisation would be the earlier of 30 days from the start of trading of the shares; or when the stabilising manager has bought 118.518 million shares, representing up to about 15.0% of the total number of shares offered under the IPO.


Maybank IB had bought 19.5 million shares at 1.25 ringgit on 10 July 2013. It had also bought 6.014 million shares of AAX from the open market on 16 July 2013. It also bought 750000 shares from the open market at rm1.25 on 15 July 2013.



Maybank purchased 8.5 million shares in Airasia X on 22 July 2013 to stabilize the stock price.



It also bought 10 million AirAsia X shares on 25 July 2013 at RM1.25 each. On 24 July 2013, it bought 5.49 million shares at RM1.25 a share.