Dividend policy by end of this year?
The media highlighted AirAsia is looking to propose a
dividend policy by 3Q10 that is targeted to be in place by
end-FY10.
Although this is positive for AirAsia’s shareholders, we do
not expect yield to be attractive considering AirAsia’s huge
capital commitment as it is still at its expansion phase.
Maintain Buy with RM1.95 TP based on 9x CY11F EPS. We
think current valuation is unjustified with AirAsia being the
largest low cost carrier in the region. Additionally, AirAsia’s
ability to fund new aircraft purchases and repay loans
should no longer be a major concern, as operating cash
flows should strengthen on stronger earnings and limited
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