Shares in Tainan-based Air Asia Co Ltd (亞洲航空) rose 51.36 percent from its initial public offering price to close at NT$33.3 on its debut on the Taiwan Stock Exchange yesterday.
The aircraft maintenance, repair and overhaul (MRO) company, which was first listed on the over-the-counter Taipei Exchange’s Emerging Stock Board a year ago, said that recently awarded military contracts would make up the bulk of its sales this year.
Military contracts are to make up about 80 percent of sales, up from 70 percent a year ago, chairman Lu Tien-lin (盧天麟) said.
The company can count on as steady sales contributions the resumption of government-owned and contractor-operated (GOCO) contracts for aircraft and helicopters, which elapsed last year, Lu said.
GOCO operations refer to manufacturing plants being owned by governments, but operated by private companies under contract to the government.
He also outlined plans for the company to become a diversified MRO company with revenue streams in both the private and military sectors.
The company is hoping to tap into the rapid growth of low-cost carriers (LCC) by specializing in servicing the single-aisle regional jets deployed on short-haul flights, Lu said, noting that Air Asia has gained certification for the Boeing 737 and Airbus A320.
Many Asian LCCs are not able to service their own fleets and the company is hoping to set up overseas subsidiaries to tap into regional markets as part of the government’s New Southbound Policy, Lu said.
The firm has not yet released financial results for last year.
Jih Sun Securities Investment Consulting Co (日盛投顧) yesterday estimated the company’s net income to have dipped 12.1 percent annually to NT$172 million (US$5.87 million) last year and sales to have fallen 11.55 percent to NT$2.42 billion as its military contracts elapsed.
However, the consulting company gave a positive outlook for the company’s earnings and margin this year.
Air Asia’s price-to-earnings ratio is estimated at about 14, which is comparable with the valuation of its peers in the local aerospace sector, Jih Sun said in a note.
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