GROUP PROJECT
Case Study: Initial Public Offering of Ordinary Shares of AirAsia X Berhad Memo

COURSE CODE : GSM 5421 COURSE NAME : INVESTMENT ANALYSIS
TRIMESTER : 2012/2013
LECTURER : DR. CHEN CHAW MIN
DATE OF SUBMISSION : 20 JULY 2013

FOREIGN INVESTORS GROUP MEMBERS:

Memo
To: Joe Campos, VP of Sales
From: Kate Chaplain, Senior Sales Associate
Date: April 5, 2013
Subject: Quarterly Review
Mr. Campos,

Purpose:
Air Asia X Berhad Initial Public Offerings (IPO) of Ordinary Shares Road Show was held on the 29th of June 2013. The purpose of this memo is to determine whether we, as large foreign institutional investors should buy or not to buy Air Asia X Berhad IPO shares with fundamental analysis and findings. Besides deciding whether to buy or not to buy, we will justify the reasons underlying our decision that we have come across that we are not buying Air Asia X Berhad IPO shares.

Background:

Air Asia X is a long-haul, budget airline based in Malaysia. The airline is operated by Air Asia X Sdn. Bhd. It is claimed by the company’s management that they are a leading low-cost, Long-haul airline, operating primarily in the Asia Pacific Region. Also, they believe that they have the lowest unit cost base of any airline in the world. This in turn has enabled them to offer fares that are targeted, on average, to be 30% - 50% lower than FSCs and to stimulate new market demand, whereby passenger volumes between Kuala Lumpur and other destinations they serve grew by an average of over 90% from the year before the launch of each route to the year ended 31December 2012. They currently serve 14 destinations across Asia (Tokyo, Osaka, Seoul, Taipei, Beijing, Hangzhou, Chengdu, Shanghai and Kathmandu), Australia (Sydney, Melbourne, Perth and Gold Coast) and the Middle East (Jeddah) with flights to an additional destination, namely Busan, commencing