Over the weekend, a business weekly reported that Tune Air (AirAsia founder) in partnership with China Everbright was planning to privatise AirAsia, citing sources familiar with the matter. However, company official stated they have not received any formal offer and would not comment.
“We are neutral on this event pending details. We now rate AirAsia as a ‘hold’ (previously buy) as the current share price, which has outperformed, offers limited upside to our unchanged target price of RM1.80, which is pegged to one time 2016 P/BV,” it said.
Maybank said AirAsia had a long history of ‘privatisation’ attempts. Since the budget carrier was listed back in November 2004, rumours of privatisation have surfaced time and again.
“By our count, there was at least five such ‘attempts’ and this latest one makes it six. However, there was never a formal offer made to AirAsia for a privatisation, thus inferring that it was not as ‘imminent’ as the market would have thought.
“A privatisation, if true, and at the last share price of RM1.81, would mean RM4.08bil to be forked out by both Tune Air and China Everbright,” Maybank said.
AirAsia, the second most active counters today, is up 6 sen to RM1.87.
Maybank said the facts were unconvincing for a privatisation to happen this time. It recalled that AirAsia had called for an Extraordinary General Meeting (EGM) on Dec 15, 2015 just to secure shareholders’ mandate to buy back 10% of its shares, effectively “sending a firm message that it is not for sale”
AirAsia has commenced its first buy back tranche shortly after announcing its fourth quarter 2015 results in February 2016.
“This maiden buy back proves that the management is making good of its ‘not for sale’ declaration. Furthermore, Tune Air has not accumulated shares in AirAsia for the past 12 months, according to filings to the Malaysian stock exchange. And if China Everbright has, the stake will be less than 5% which does not require filing to the exchange,” it said.
AirAsia’s share price has surged by 30% after releasing its positive fourth quarter FY15 results in end-Feb 2016.
“It is now at our target price of RM1.80, and we downgrade the stock to a hold. Should the share price spike further on this privatisation angle, we recommend investors to take profit and recycle the booty into other quality airlines such as IndiGo and Cebu Air,” Maybank said.
AIRASIA (5099) - AirAsia shares surge on news of potential privatisation
http://www.thestar.com.my/business/business-news/2016/03/28/airasia-shares-surge-on-news-of-potential-privatisation/
