Maybank – GIAA Retain BUY at target price IDR450

7:11 PM | January 6, 2016 Fundamental Tags: No Comments

We continue to be positive on GIAA due to recovery in passenger yields come into play and a low oil price environment. As such, we retain our
BUY call on GIAA with PT of IDR450, implying 6.0x FY16 EV/EBITDAR and 45% upside. The stock trades at 5.8x EV/EBITDAR, 6% discount to regional
peers’ 6.2x. Potential catalysts to the stock might include, in our view, low oil price and recovery in passenger yield.

2015-16 earnings upgrade
GIAA reported lower-than-expected 11M15 operational numbers due to the Mount Rinjani eruption and the absence of Umroh services in the
month of November. However, the implied jet fuel price was USD84/bbl, 5.6% lower than our 2015 forecast of USD89/bbl. That said, we upgrade
our 2015-16 earnings forecast by 15% and 10% to USD83m and USD78m primarily due to lower jet fuel price assumptions. Our new FY16 earnings
forecast suggests 10% earnings growth and 6% above consensus. We estimate for every USD1 decline in our implied jet fuel price assumption,
our 2016 earnings forecast would be up by 12%.

4Q15 earnings preview
We forecast GIAA will post 4Q15 earnings of USD32.3m, which is up 47% QoQ. The strong earnings growth in 4Q15 is due to, in our view,
seasonality factors and lower oil price. On a YoY basis, the 4Q15 suggests earnings recovery as GIAA posted net loss of USD152m in 4Q14 due to a
combination of lower oil price and efficiency efforts.

Positive vibes for the industry
The new economic stimulus package that eliminates import tax from 5-10% currently is positive for GIAA. Annually, GIAA spends USD60-60m for
spare parts. We forecast the removal of the import tax would increase FY16 bottom line by 5%