Shares outstanding: 4.4 billion
Par Value: 1 dh per share
PE estimates assuming market share price is 1 dh and 2 dhs.
2006 earnings: AED 101m, 2006 EPS 0.023 dhs, PE (1 dh): 43.6, PE (2 dhs): 87.1
2007 earnings: AED 226m, 2007 EPS 0.051 dhs, PE (1 dh): 19.5, PE (2 dhs): 38.9
...
2011 earnings: AED 369m, 2011 EPS 0.084 dhs, PE (1 dh): 11.9, PE (2 dh): 23.8
That's assuming Air Arabia don't issue share dividends between now and 2011. If they do, then earnings will be diluted, but that may be unlikely since their prospectus stated a cash dividend payout ratio policy of 25%.
Gulf News 15 Mar 2007 wrote:
Air Arabia's profit tipped to reach Dh226m in 2007
By Ivan Gale taff Reporter
Dubai: Air Arabia profits will rise by 123 per cent this year from operating new routes and interest income earned though its initial public offering, according to research by Shuaa Capital.
The private equity firm forecasts that the Sharjah-based airline will increase profits from Dh101 million in 2006 to Dh226 million this year.
Shuaa is also the underwriter for the Air Arabia IPO on March 18 on Dubai Financial Market.
Air Arabia will attempt to raise Dh2.56 billion to finance its fleet expansion up to 34 new planes by 2015, and might also establish a second hub for the no-frills airline. Created in 2003, Air Arabia became profitable in 2005.
Interest income earned from the cash infusion is the primary reason for the jump in profits this year, said Kareem Murad, an aviation analyst at Shuaa.
Murad said the market for low-cost carriers was heavily underpenetrated in the region.
This has left plenty of room for Air Arabia to prosper despite new competition such as Jazeera Airways, which established a second hub in Dubai recently.
"The penetration rate is almost zero, so there is definitely room for players to come in," he told Gulf News.
In the forecast, revenues are slated to grow at a less feverish but nonetheless robust pace, rising 37 per cent from Dh749 million in 2006 to Dh1.03 billion this year.
Air Arabia has prospered through the UAE's close proximity to Russia, Eastern Europe and India, considered major drivers to the region's aviation industry.
Airbus predicts Middle East passenger traffic to grow at an annual rate of 7.1 per cent through 2015, compared to a global average of 5.3 per cent.
The five-year Shuaa forecast said that the Air Arabia faces threats from new competitors, political instability in the region and a potentially slow pace of liberalization of the aviation sector.
However Air Arabia, one of the first no-frills carriers in the region, will continue to grow rapidly, reaching revenues of 2.46 billion and net profits of Dh369 million in 2011, the report said.
Air Arabia pre IPO coverage report from Shuaa Capital here
Some good looking research but Shuaa Capital don't actually appear to make a recommendation.
Their PE ratios are slightly different from what I got. They've used 4.67 billion shares outstanding. Which is correct. The 4.4 billion figure I used was from memory and came from the original Shuaa news of the Air Arabia IPO (so it was their fault I got it wrong ). _________________ UAE IPO list | posting guidelines
Some good looking research but Shuaa Capital don't actually appear to make a recommendation.
Actually, it appears they did according to their own press release ... or did they?
Who wrote this:
SHUAA Capital report: Positive outlook for Air Arabia
In its research report on Air Arabia, SHUAA Capital projected encouraging performance for the low cost carrier based on the company's competitive strengths, projected financial performance, and general economic and demographic conditions.
The report highlighted Air Arabia first mover advantage, its ability to scale up, a young fleet and the high utilization rate of its aircraft. In addition, Air Arabia enjoys a low cost base, which when coupled with the favorable home and regional markets dynamics is expected to positively impact its projected financial performance for the next few years.
Revenues are projected to reach AED1.03 billion, an increase of 37% from AED749 million in 2006, with net profits expected to more than double for the current year to reach AED226 million, from AED101 million for the past financial year.
Kareem Murad, senior Transportation and Logistics Sector analyst at SHUAA Capital, said 'Air Arabia pioneered the low-cost carrier (LLC) model in the Middle East, thereby being the first provider for a service of this nature in a market that has almost zero percent penetration rate. In addition, the demand for air transportation has risen substantially over the last few years, and the trend is poised to continue in light of the rise in demographics, growth in tourism, as well as deregulation, liberalization and improved infrastructure. All of these elements help to solidify Air Arabia footing, and reflect extremely well on the company's future.'
Due to the fact that air travel's price elasticity of demand is high, coupled with the low penetration rate, SHUAA Capital expects low-cost carriers to enjoy higher growth rates than conventional airlines in the region.
For further information, please contact:
Dana Budeiri - SHUAA Capital - Dubai, UAE
Tel: +971 4 319 9712
SAHARA Group - PR Department
Tel: +971 6 573 7018
About SHUAA Capital
SHUAA Capital was established in 1979 for the express purpose of investing and promoting capital flows into the Arab region.
In 2000, SHUAA Capital augmented its existing proprietary investment activities to encompass a broad range of financial services including asset and portfolio management, investment banking services, prime regional brokerage and portfolio advisory services and private equity. Today the company is one of the leading financial services institutions in the Arab region. Total client assets under management stand at US$2 billion as at 30 March 2006.
As part of its asset and portfolio management services, SHUAA Capital currently sponsors and manages seven investment funds targeting the Arab region. In addition, SHUAA Capital also manages six third party investment funds sponsored by leading financial institutions in the Arab region.
SHUAA Partners, its private equity arm, manages $300 million in two funds that invest in the GCC and the Levant.
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... or did they?
