Original link: http://eohkis.com/?p=32

I have always considered myself both value and opportunistic trader/investor. This strategy has helped me gained 30% return when I was trading in the US for a year (Perhaps it's not so great, as S&P 500 recorded around 30% return for the same period). It's the same mindset that has led me to buy a ridiculously undervalued stock: AIRASIA, costing me over 31% unrealized loss since I bought it in late July.

At the time of writing this,  AIRASIA was bouncing back from its 52-week low at 0.765 MYR (~ 0.18 USD). It has lost over 70% of its price since January 2015. Despite its billions of debt, accounting scandals and depreciating Ringgits, I still feel that it's a value buy and here's why:

Net Tangible Assets (NTA)

NTA is always my key metric to study when analysing a stock. After AirAsia latest earning announcement, the company still hold a NTA of  1.71 MYR. That means, if AirAsia were to be liquidated at this moment, each shareholder would get 1.71 MYR back, at least theoretically. Essentially, you will be spending less than 1 MYR to buy 1.71 MYR worth of asset. So, what can be a better deal?

Falling Fuel Cost

While Ringgits depreciated around 13% since January 2015, Crude Oil price fell roughly 25% during the same period. From the latest quarterly reports, Aircraft fuel expenses was about 0.96 Billion MYR(over 40% of operating expenses) for the first 2 quarters, compared to 1.11 Billion MYR(48% of operating expenses) from the past year.

Strong Earnings

Despite having a bumpy start for 2015, AirAsia still recorded higher revenue for the first 2 quarters in 2015 compared to the same period in 2014. If it wasn't for the depreciating Ringgits, its net profit would be a lot more impressive. But hey, almost all Bursa-traded stocks are impacted by Ringgits. Therefore, forex losses should not be emphasized so much, if you are trading only in Bursa of course.

EOHKIS Sentiment: Buy

For me, it's clear: it's a value buy. I missed the window when NOKIA was trading below its NTA at 1.71 USD in mid 2012, and it ended up closing at 4.18 USD in Jan 2013. We shall see if the same strategy would bring me any profit this time.

Disclosure: The author has a long position in AIRASIA(BURSA.5099). This article is purely opinions of the author, whom should not be considered a professional financial advisor by any means. Please trade/invest at your own risk.  

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