KUALA LUMPUR, May 30 2019 : Affin Hwang Capital has upgraded AirAsia Group Bhd to a “buy” call at target price (TP) of RM3.35, following the generous dividend, solid operating performance and bright prospects of its digital business.
In a note today, the research house said AirAsia had declared an unexpected special dividend of 90 sen, despite its earnings results in the first quarter of 2019 (1Q19) which was below forecast.
AirAsia’s first quarter 2019 (1Q19) net profit of RM96 million was sharply lower than the RM1.14 billion reported in 1Q18 due to an absence of disposal gains.
“We cut our 2019-2021 core earnings per share (EPS) by 24-30 per cent, but raised our TP to RM3.35 (from RM2.86), based on the 90 sen special dividend and ex-dividend fair value of RM2.45, pegging the group at 10 times 2020 EPS,” it said.
AirAsia’s first quarter 2019 (1Q19) net profit of RM96 million was sharply lower than RM1.14 billion reported in 1Q18 due to the absence of disposal gains.
The low-cost airline said the dividend of 90 sen will be paid on Aug 29.
The special dividend payout of RM3 billion is to be funded via cash in hand, proceeds from the ongoing sales of aircraft to Castlelake L.P and its planned disposal of an additional 19 aircraft.
As at 11.59 am, AirAsia shares were 22 sen higher at RM2.85 sen with 63.65 million shares transacted. – Bernama