According to the recent Visa poll, Singaporeans are ranked top online spenders in the Asian- Pacific region in 2008, followed by spenders in Hong Kong and India. Online shopping in these regions saw the largest qoq increase in 4Q08, growing by at least 30%. Demand was particularly high for online tickets, online travel agents and travel accommodation. The trend to shop online looks sustainable with 81% of the respondents stating interests to shop online in the next 12 months.

Indeed, AST is a direct beneficiary to the rising demand in online spending, given its niche positioning in the online travel segment. In fact, AST has been able to record improvement in profitability and room nights in 1H09 (Sep 08 – March 09) despite the gloom in the weak travel industry, thanks to the unstoppable switch to its online travel platform.

Not resting on laurels, the group continues to enhance the appeal and scalability of its fully integrated online book engine. In time to come, AST will be the world’s first to launch flights with multiple stopovers from one departure point. AST has a good head start in doing so due to its long established physical presence across 8 countries globally.

AST has recently expanded into the video content space through acquiring the remaining 49.9% stake in Star-Travel.com. Star-travel has an inventory of over 7,000 hours of travel programmes and destinations footages which will enable AST to produce mini destination videos for its hotel partners. With the sizable exclusive hotel contracts on hand, we estimate AST could readily add $20m through video production. In addition, its collaborations with renowned high-traffic websites (such as YaHoo and Jobstreat.com) are cost efficient means to boost bookings.

AST is well positioned to be a key beneficiary of global recovery. Besides, its market capitalization is still below the replacement cost of its fully integrated, real time online booking engine. Its valuations are even more attractive after price correction, trading at 50% discount to peers. Reiterate Buy!