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CIMB – A 43% Downside Rating on Air Asia - omightycap
Under MFRS 16 (executive summary), the accounting standards for ‘leasing’ would be different. Air Asia’s structure from leasing of its airplanes would see a major change on the latest MFRS 16 balance sheet reporting.
MFRS 16 would see operating leases be brought back onto the balance sheet as a form of liability. That being the case, the gearing would rise significantly inside the balance sheet.
As a results from this, the operating cost would rise albeit only accounting numbers which naturally lowers the EPS. What we can’t tell is the market reaction towards a lower EPS. The cost aren’t on cash terms meaning the cash creation still stays the same.
We should see if the market agrees with the 43% downside target placed on Air Asia by CIMB. Have a look at their report below!
https://omightycap.wordpress.com/2019/04/09/cimb-a-43-downside-rating-on-air-asia/
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Discussions
Be the first to like this. Showing 10 of 10 comments
wonder why CIMB downgrade to TP 1.5 but THEIR warrent C79 issue on 26/Feb exercise price 3.5??? it should be below 1.5??? can CIMB explain on it?
2019-04-10 12:42
y Jona0724 > Apr 10, 2019 12:42 PM | Report Abuse
wonder why CIMB downgrade to TP 1.5 but THEIR warrent C79 issue on 26/Feb exercise price 3.5??? it should be below 1.5??? can CIMB explain on it?
==========
per regulation, there is a firewall between research and warrants department.
2019-04-10 12:44
Has any researcher study MFRS 16 lease exemption for short term lease 12 or less ?below is obtained from lease back agreement for AA
Information on lease arrangements for the SLB Aircrafts are set out below:
No. Terms Details
1. Head lessor : The Purchaser
2. Sub lessor : AACL
3. Intermediate lessor
(relevant for AirAsia
Japan Co. Ltd only)
: Merah Putih 2, Inc.
4. Lessee : AAB and AirAsia Japan Co. Ltd
5. Total aircraft to be
leased
: Four (4) SLB Aircraft
6. 12-month period lease
rental
: USD13.9 million (approximately RM58.2 million)
7. Commencement date of
lease
: Commencement date of the lease of each relevant
SLB Aircraft is on delivery of such SLB Aircraft from
manufacturer
8. Duration of lease : Twelve (12) years from the date of delivery
9. Security deposits : USD1.7 million (approximately RM7.3 million)
http://disclosure.bursamalaysia.com/FileAccess/apbursaweb/download?id=91647&name=EA_GA_ATTACHMENTS
2019-04-10 21:06
95% call warrant near maturity date cannot make money one...hmmm hmmmm...
2019-04-10 21:09
Factorrumour...thanks you...haha....I think better to calculate the lease cost when you know how much for 12 years instead of how old the plane...you know it going be liability recognise so can again again how much is the lease cost according to the term
2019-04-12 05:59
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MFRS 16 undoes the rational for the sale of planes.
2019-04-10 12:39