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VJC [OUTPERFORM +10.7%] - Fuel costs to be passed on; passenger yields improving - Update

We downgrade VJC to OUTPERFORM from BUY following the recent rally in the stock price. We increase our target price 40.6%, reflecting: (1) improving passenger yields, (2) improving RPK spread, (3) lower WACC and (4) higher peer multiples. We forecast 2018 revenue and NPAT to grow 32.9% and 13.8%, respectively, with core NPAT expected to grow 53.9% due to VJC’s continued aggressive international route expansion.