Super App And RCUIDs To The Rescue

AirAsia’s issuance of convertible debt should not be dilutive over the next two years as the odds of conversion are minimal. We are positive on AirAsia’s entry into Thailand’s ride-hailing and e-payments market by partnering with Gojek, though competition is expected to be intense. We have incorporated the embedded valuation of US$1b for AirAsia’s Super App into our valuation. Our target price is lowered to RM0.54, given a 35% increase in loss estimate for 2021. Maintain SELL.