FULLY VALUED
(Last Traded Price (7 Jul 2021): RM0.895 (KLCI : 1,530.15)
Price Target 12-mth: RM0.55 (39% downside) (Prev RM0.40)
Analyst
Siti Ruzanna Mohd Faruk +603 2604 3965 sruzannamf@alliancedbs.com

Boost to SuperApp


Investment Thesis
Maintain FULLY VALUED with higher TP of RM0.55. We are positive on AirAsia Group’s (AAGB) acquisition of Gojek’s Thailand business which will give a boost to the AirAsia SuperApp as it taps into a booming e-commerce market. Nonetheless, potential increase to earnings will take time to materialise with both businesses recording losses as of end-FY20. We believe the losses incurred by the airline business still weigh on the group’s financials in the near term.

Still tough as AAGB rides on the domestic market. We expect the group’s coming quarters to remain in the red as bans on travel remain and its revenue may not be able to cover high fixed costs. Vaccine roll-out remains a key catalyst to the group’s airline business as resumption of domestic market activities will bring recovery.

The group requires additional capital. Discussions are ongoing to secure commitments from the banks for the Danajamin PRIHATIN Guarantee Scheme in Malaysia. It also has debt and rights issuances that are currently under discussion. The group aims to raise RM2.4bn in total. The resulting financing cost will weigh on future earnings.