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GIAA

Contact our analyst Revita
Targeting 38% upside. BUY
23nd May 2019
Price Rp 412
Target price Rp 570
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Focus on Margin
  • After GIAA began their cooperation with Sriwijaya Group last year, the company is optimistic they can improve both GIAA and Sriwijaya group performances.
  • As of 1Q19, GIAA’s domestic passenger yields grew 39.7%yoy while Citilink was up by 55.6%, Sriwijaya 149.5% and Nam Air 97.8%.
  • Overall domestic passenger yields in 1Q19 increased 20.4% yoy to 7.6 USCent with a full year target of 7.74 USCent.

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Improvement in profits
  • During 1Q19, amid rising fuel prices and ticket prices, GIAA has improved its profitability by increasing the top line by 19.7% yoy and the bottom line by 130.7% yoy.
  • GIAA is also locking in fuel hedges at 69 USCent/L, this plus low season in 1Q19, led to a fuel cost decrease of 9.4% yoy.
  • GIAA will also cut unprofitable routes.
  • In addition the government has responded to public concern over soaring airline ticket prices since the end of last year by lowering the upper limit on fares by 15%. We believe, this will not have much impact as there was a large increase in late 2018 and additional baggage fees for low cost carriers.
  • We estimate bottom line in 2019F -2020F to reach USD.69.1 mn and USD. 102 mn respectively

Valuation: 38% upside
  • We are targeting a TP within one year of IDR. 570/share which is 10x PER. With 38% upside potential, we recommend BUY.
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Previously
GIAA 2012
PT. Binaartha Sekuritas
Setiabudi Atrium, Jl. HR Rasuna Said No.62, RT.18/RW.2, Karet Kuningan, Setia Budi, Kota Jakarta Selatan, Daerah Khusus Ibukota Jakarta 12920
​+62215206678
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