KUALA LUMPUR (April 3): Hong Leong IB Research has maintained its “Buy” rating on AirAsia Bhd with an unchanged target price of RM3.30 after Japan, China and South Korea imposed bans on Thailand airlines.

In a note today, the research house said based on detail of the ban, Thai airlines cannot increase frequencies to their existing routes or add new routes (including chartered flights) to these countries.

“We believe that Thai AirAsia (TAA) growth plan will be affected by the imposed ban from these countries.

“AirAsia management has not altered its existing fleet deployment plan to TAA, as TAA expect the ban to be momentary (currently Thailand government is aggressive pursuing ramifications to uplift the ban through enhance safety procedures),” it said.

HLIB Research said that aternatively, TAA could redeploy the additional fleets to other high demand destinations such as ASEAN and India or redeploy the fleets to other associates within AirAsia Group to better utilize the fleets.

“Prolonged ban is the main risk as it may impair the potential growth of TAA.

“Maintained Buy with target price of RM3.30 based on unchanged 10% discount to SOP,” it said.