AirAsia, Southeast Asia’s biggest budget carrier, will appoint bankers next week to manage its Indonesian unit’s initial public offering as it tries to secure funds for expansion.
The Jakarta IPO is expected to take place in the fourth quarter, chief executive officer Tony Fernandes told Bloomberg on Monday. The amount to be raised by the unit, which has 20 planes, is still being decided, he said.
AirAsia also intends to hold an IPO for its Thai unit to help fund growth plans, including a possible order for 175 of Airbus SAS’s revamped A320s.
Business is “excellent,” Fernandes said. The airline, based in Sepang, Malaysia, is “very happy with results.” Fourth-quarter earnings are due to be reported on Thursday.
AirAsia Indonesia plans to raise funds so it can buy its own planes, which will help pare the parent company’s debt-to-equity ratios, Fernandes said. The Indonesian arm may surpass the Malaysian operations, which are more than three times as big, in the “not-too-distant future,” he said in November.
AirAsia closed unchanged at 2.76 ringgit in Kuala Lumpur trading on Monday. The stock has risen 9.1 percent this year.
The company may post a profit of 224.4 million ringgit ($74 million) in the quarter ended in December, according to the average of four analyst estimates compiled by Bloomberg. It posted a net income of 76.7 million ringgit a year earlier.
Garuda Indonesia, the nation’s biggest carrier, Singapore-based Tiger Airways Holdings and Philippines-based Cebu Air have also held IPOs since the beginning of 2010 as rising stock markets and growing travel lure investors.
Budi Ruseno, an analyst from Bhakti Capital, said the Indonesian stock market should be in good shape by the fourth quarter and AirAsia’s good reputation will help the IPO.
“They have good management and they don’t have big, long-term debt like Mandala. I think it will go smoothly,” he said, referring to Mandala Airlines, a state-owned airline grounded since Jan. 13 by financial woes and waiting for creditors to approve its restructuring plans.
AirAsia Indonesia, he added, has established routes within the domestic market and abroad, which should make it appealing to investors.
Even with the its good management, Budi said, the success of AirAsia Indonesia’s IPO will depend on the price that it offers at the first sale. “If the price is good, which means not too high and too low, the market will buy the stake,” he said.
Overly optimistic pricing and poor timing hampered Garuda’s IPO. Its main underwriters had to absorb almost half of the offered shares because of lukewarm interest at home and abroad.
Ibrahim, general manager and senior analyst at Harvest International Futures, a trading and business consultancy company, said holding an IPO in the fourth quarter would be good timing.
“In the first and second quarters, inflation pressure is high, which affects the market. In the fourth quarter, inflation pressures will have eased since we estimate that the central bank will have more interest rate hikes before that,” he said.
“Investors will also consider that this AirAsia is from Malaysia, which has good economic growth and a stable political and social environment.”
Quoted from :http://www.thejakartaglobe.com/business/airasia-indonesia-eyes-fourth-quarter-ipo/424004
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