Asia Aviation

Asia Aviation Plc (AAV)

Event
- Tassapon Bijlevelad, CEO of AAV, reduced his stake in AAV with a big lot sale of 235m shares, or 4.8% of the total on May 17, 2013. The selling price was Bt6.5/share and total value was around Bt1.53bn.
Impact
- Why did he sell the stock? Mr. Tassapon said that he sold the 4.8% of AAV to raise cash for: 1) JV with AirAsia X to set up new airline called “Thai AirAsia X”, that is to have long-haul flights of more than 4 hours; and, 2) to develop two new hotels on Petchburi Road, Bangkok.
- What is left after this transaction? After this transaction, Mr. Tassapon will hold 28.2% in AAV (from Bt33%) while management’s total portion (6 directors included Mr. Tassapon) will be reduced to 54.9% (from 59%).
- End of silent period. AAV management has an internal policy to not reduce their combined stake in AAV below 51%. Given the silent period ends on May 31, 2013 (one year post IPO), the risk of a further selldown by management is limited to 3.95%.
- Thai AirAsia to benefit from Thai AirAsia X. Thai AirAsia X is a subsidiary of AirAsia X, which plans to operate in Thailand from 2014. Thai AirAsia X is to provide low-cost, long haul air transportation in Thailand but on routes different to those of Thai AirAsia. We expect AAV to benefit from Thai AirAsia X as it could feed clients into Thai AirAsia’s network.
Earnings and target price revision
- No change
Price catalyst
- 12-month price target: Bt7.75 based on a EV/EBITDAR methodology.
- Catalyst: International tourist arrival
Action and recommendation
- AAV share reacted negatively when market realized that Mr. Tassapon sold AAV stock. However, we see that this transaction as having no impact on AAV’s fundamentals. We maintain our Outperform rating on AAV.