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UPDATE 1-AirAsia shares surge on dividend pledge
* Shares up 10 percent, biggest one-day jump since March 2012
* Adopts dividend policy, first since IPO in 2004 (Add detail, analyst comments)
KUALA LUMPUR Feb 27 (Reuters) - Shares in AirAsia Bhd rose nearly 10 percent on Wednesday, their biggest one-day jump since last March, after the company said it will pay a dividend from this year, its first official dividend policy since listing in 2004.
Shares in Asia's largest budget airline by passengers, which have lost more than a quarter of their value in the past year, rose as high as 2.94 ringgit on Wednesday, while the benchmark Malaysian index rose 0.12 percent.
Late on Tuesday the airline said it has adopted a dividend policy under which it will pay an annual dividend of up to 20 percent of its net operating profit, starting this year. It declared a special dividend of 18 sen per share after announcing 2012 core net income of 858.23 million ringgit ($276.67 million), a marginal increase on the previous year.
Including a one-off gain of 1.16 billion ringgit from a sale of shares in its Thai operation, full year profit was 1.88 billion ringgit.
"The company has formalised the dividend policy ... as part of our plans to give more certainty every year to shareholders," Chief Executive of Malaysian operations Aireen Omar said in a statement on Tuesday.
Kuala Lumpur-based Kenanga Research upgraded AirAsia to outperform from market perform, and raised its target price to 3.23 ringgit per share from 3.07.
Nonetheless, another Kuala Lumpur-based research house, OSK Research, wasn't too excited about the dividend. It kept a 'buy' rating on AirAsia with an unchanged fair value of 3.39 ringgit per share.
AirAsia plans this year to set up a new airline in India, in a joint venture with Tata Sons Ltd, but will face stiffer competition in its home market of Malaysia.
Malindo Air, a joint venture between Lion Air of Indonesia and Malaysia's National Aerospace & Defence Industries Sdn Bhd, has received approval from Malaysian authorities to start operations and will offer low-cost flights from March, it said on Tuesday.
"Despite the surprise payout for 2012, we have not projected any potential dividend for 2013 and 2014 as we prefer to be cautious on the company's outlook for this year in view of the entry of Malindo," analysts at OSK Research said in a note on Wednesday. ($1 = 3.1020 Malaysian ringgits) (Reporting by Niluksi Koswanage, Yantoultra Ngui and Al-Zaquan Amer Hamzah; Editing by Daniel Magnowski)
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