My previous article on the Airasia X's IPO was 6 months ago and it was based on its draft prospectus. I felt that it is injustice to the company if I do not update some of the details. The pricing is in fact even more bullish now than when I wrote the paper. It is now pricing the IPO at RM1.45, hence valuing the company at RM3.437 billion post IPO.
Now straight to the valuation. Obviously, after the December numbers, Airasia X has its financials updated. For FY2012, it registered a PBT of RM38 million. After stripping out the forex gain though, it was still registering losses. First quarter 2013, it registered a PBT of RM34.8 million. Assuming a full year 2013 annualised numbers, that may exceed RM150 million (assuming it reduces its financing costs and growth).
With the profitability, the valuation seems to be lower although it could still be at a high twenties PE or even 30x. Do note that I used PBT because the add back on deferred taxation is misleading .
Now the thing about this IPO is that it is a company which attracts global attention. The high valuation has been the same on IHH and it does not seem to deter these international guys to take a stake in the company. The original thought that retail portion is going to be bigger is not true - that actually surprised me when I heard it. Institutional portion is still 22.7% as compared to retail portion of 10.6%.
I do not invest in a company with such valuation, but again Airasia X is a growth company. It will be using up more cash as it is a capex heavy business, but one should not fight the attractiveness part of the brand and guys who are selling the IPO.
Other related article:
Why Airasia X may not be Airasia