From Bursa announcement on 2nd May

For the shareholders’ information, Ernst & Young PLT, being the Company’s external auditors for the financial period ended 31 December 2022 (“FYE2022”) have signed off the Company’s audited financial statements for FYE2022 without any qualification.

Yes, that could be the reason why AAX delay the restructuring plan announcement to July.

Because in 3 weeks time, after announce the superb 1Q 2023 quarter, the accounts will look much better than now.

It is easier to get Bursa approval on the restructuring plan with a much better accounts for both AAX and CAPITAL A.

AAX has RM182 million in cash and only RM50 million in immediate liabilities to be paid within a year.

Moreover, the company can also generate its own cash flow.

Read this for the debt restructuring which clearly state that debt has been reduced.

Page 16, Annual Report 2022:

Total liabilities reduced significantly to RM2.7
billion (2021: RM35.5 billion) as a direct result of
the Debt Restructuring exercise executed by the
Company.

Wah, earnings drop 49% or almost half compared to last quarter.

International travel jumped 69% year-on-year in March 2023 against March 2022, according to International Air Transport Association (IATA).

Air travel records strong demand growth in March 2023, says IATA

KUALA LUMPUR (May 4): Air travel recorded a strong demand growth for March 2023, rising 52.4% in total traffic as measured in revenue passenger kilometres, or RPKs, compared with March 2022, the International Air Transport Association (IATA) said.

“Domestic traffic for March rose 34.1% compared to the year-ago period. Total March 2023 domestic traffic was at 98.9% of the March 2019 level,” it said in a statement on Thursday (May 4).

It said international traffic climbed 68.9% versus March 2022, with all markets recording healthy growth, led once again by carriers in the Asia-Pacific region.

https://www.theedgemarkets.com/node/665619

AAX no burden from digital venture as it is pure aviation.
Capital A digital venture still making loss that's why limits overall group profit upside.

If MAS can stage a huge turnaround, imagine what AAX can do for its upcoming result in about 20-25 days time.

Huge Turnaround: Malaysia Airlines Goes From $173 Million Loss To $125 Million Profit

It was one of the best-ever quarter performances posted in the past two decades.

The Malaysia Aviation Group posted a significant financial turnaround, with last year's operating profit of approximately RM556 million ($125 million) effectively reversing the RM767 million ($173 million) operating loss reported in 2021. The return to profitability was also despite higher fuel prices, labor costs, and a weaker currency.

https://simpleflying.com/malaysia-airlines-turns-huge-2022-loss-2023-profit/

I will repeat this again, Tony already no longer CEO of AAX since few months ago in November. So no issue of abandoning ship at AAX.

https://www.thestar.com.my/business/business-news/2022/11/01/fernandes-steps-down-as-aax-ceo

Latest management of AAX as below.

http://www.airasiax.com/management.html

https://newsroom.airasia.com/news/aax-1q20223-ops-stats

AAX passenger traffic jumped 49% in 1Q2023 against 4Q2022!

https://www.thestar.com.my/business/business-news/2023/04/28/airasia-x-passenger-traffic-jumps-49--in-1q

KUALA LUMPUR: AirAsia X Bhd (AAX) carried 504,476 passengers in the first quarter (1Q23), up 49% from 337,638 passengers in the fourth quarter of 2022, driven by the New Year holidays and spring season travel demand.

The carrier, in a statement, said the impressive performance was on the back of increased seat capacity which grew by 47% quarter-on-quarter (QoQ) to 630,069 seats while available seat kilometres (ASK) surged by 71% to 2,899 million.

“This quarter, an extensive focus continued for fleet reactivation supporting the ramp up of flight frequencies across AirAsia X’s core network.

“AAX relaunched more destinations catering to strong demand, now serving scheduled flights to Osaka, Busan as well as Shanghai, besides increasing its services to fly seven times weekly to Tokyo,” it said.

While u all still quarrel over whether Tony will leave (when I repeat so many times he is no longer CEO of AAX), AAX announced the superb passenger volume. Up 49% in Q1 against Q4 last year.

Focus on what matters...

Why airfares are so expensive and likely to remain that way

https://www.thestar.com.my/aseanplus/aseanplus-news/2023/04/27/why-airfares-are-so-expensive-and-likely-to-remain-that-way

Even French President knows that China aviation reopening is real and seize the opportunity! News as below.

During a French state visit to China, Airbus signed new cooperation agreements with China Aviation industry partners.

Witnessed by Chinese President Xi Jinping and French President Emmanuel Macron, Airbus CEO, Guillaume Faury signed with the Tianjin Free Trade Zone Investment Company Ltd., and Aviation Industry Corporation of China Ltd., an agreement to expand A320 Family final assembly capacity with a second line at its Tianjin site. The agreement will contribute to Airbus’ overall rate objective of 75 aircraft per month in 2026 throughout its global production network.

https://www.airbus.com/en/newsroom/press-releases/2023-04-airbus-and-china-aviation-industry-sign-next-phase-in-partnership

Waiting for 2 good news now:
1. Approval for extension of regulatory plan somewhere this week.
2. Superb earnings in end May.

Target of RM3.36 if they can register sustainable EPS of 28 sen per quarter.

OK, it is good to remind again that Tony already no longer CEO of AAX since few months ago in November. So no issue of abandoning ship at AAX.

https://www.thestar.com.my/business/business-news/2022/11/01/fernandes-steps-down-as-aax-ceo

Latest management of AAX as below.

http://www.airasiax.com/management.html

https://www.thestar.com.my/business/business-news/2023/04/20/recovery-in-china-domestic-aviation-sector

China aviation continues to recover. This bodes well for AAX.

Waiting for 2 good news now:
1. Approval for extension of regulatory plan somewhere this week.
2. Superb earnings in end May.

Target of RM3.36 if they can register sustainable EPS of 28 sen per quarter.

If Tony wants to run, then will quietly leave instead of telling the whole world first... The plan is to get a successor to run aviation. He wants to chase the digitalization dream via CAPITAL A. Aviation business get someone else to run.

By the way, Tony already have new CEO for AAX since Nov-2022.

https://www.thestar.com.my/business/business-news/2022/11/01/fernandes-steps-down-as-aax-ceo

Benyamin Ismail is the CEO of AAX currently

http://www.airasiax.com/management.html

Savvy Hong Kong fliers say book early as air ticket prices surge by 15 to 40 per cent, unlikely to drop any time soon

With demand outstripping supply of seats, ticket prices are considerably higher than before pandemic
Shortage of airport workers blamed for preventing some airlines from resuming, expanding flights

https://www.scmp.com/news/hong-kong/hong-kong-economy/article/3218000/savvy-hong-kong-fliers-say-book-early-air-ticket-prices-surge-15-40-cent-unlikely-drop-any-time-soon?module=perpetual_scroll_0&pgtype=article&campaign=3218000

I foresee two good news in the near term:
1. Superb earnings in 1 month time (AAX to release result by end-May).
2. Approval by Bursa on its regulation plan extension (should be out this week).

Target of RM3.36 is still insight assuming AAX deliver core EPS of 28 sen for May result quarter.
This is using 3x PE which is already so low, usually airlines PE is 5x to 7x.

I think Bursa will extend because the aviation industry is improving. Somemore tourism is an important industry to Malaysia with huge economy multiplier.

AAX and Capital A employs a lot of people in Malaysia.

MAHB expects to welcome more airlines after 125% jump in 1Q passenger traffic

https://www.theedgemarkets.com/node/663995

Wah, more than double passenger travel volume in Q1 2023 for Malaysia Airports. Surely AAX business volume also surge at least same or more than that !

Looking ahead to superb Q1 2023 result !

https://www.youtube.com/watch?v=PRKVizPH2-w

good video describing Spritzer fundamental

take profit before Raya, end of strong run.

Aviation sector is recovering that is for sure. Read this news.

Flight Friday: How Are The U.S. 'Big 4' Airlines Faring Compared To 2019?

American Airlines: From January 2023, American has been operating more flights than the equivalent month from 2019, and flights have tracked very closely to 2019 numbers since.

Delta Air Lines: Delta has yet to operate the same number of flights compared to the same month in 2019, however they are operating in the upper 90% range and should surpass 2019 numbers in the coming quarter.

Southwest Airlines: Southwest have been operating at over 100% since August 2022, due to their strength in the U.S. domestic market. The only blemish is December 2022, with the well-publicized computer issues that Southwest faced during the month.

United Airlines: United surpassed 100% flight as of the start of the 4th quarter of 2022 and has remained above that number. Of all the “Big 4,” United leads in terms of number of flights when compared to its 2019 figure.

Source: https://aviationweek.com/air-transport/flight-friday-how-are-us-big-4-airlines-faring-compared-2019

Chinese Airlines Overwhelmed With Cabin Crew Applications

Source:
https://simpleflying.com/chinese-airlines-overwhelmed-cabin-crew-applications/

My target of RM3.36 using 3x PE is intact assuming AAX can maintain their core EPS at least 28 sen registered in 4Q2022.

Stable dividend payer

I think Bursa will extend because the aviation industry is improving. Somemore tourism is an important industry to Malaysia with huge economy multiplier.

AAX and Capital A employs a lot of people in Malaysia, u see MOT also friendly to AirAsia one.

AAX will benefit not only from China reopening but from resumption of travel to Istanbul, Australia and many other parts of the world including US!

My target of RM3.36 using 3x PE is intact assuming AAX can maintain their core EPS at least 28 sen registered in 4Q2022.

Another positive news on AirAsia X on its expansion plan. It is now profit driven as compared to market share focused last time. This means higher possibility for higher EPS!

Source: https://www.nst.com.my/business/2023/04/898062/airasia-x-cautiously-executes-growth-plans-ceo-benyamin-ismail

5 takeaways from the news:

1. AirAsia X is executing its growth plans cautiously with calculated moves.

2. The airline will focus on traditional routes and regional destinations before expanding to longer routes like the
United States.

3. AirAsia X will introduce Istanbul as a new destination, targeting middle-income travelers who prefer low-cost carriers.

4. The recent reopening of China presents a huge opportunity for AirAsia X, and the airline has already started flying to Hangzhou, Shanghai, and Beijing with plans to fly to Chengdu in the future.

5. AirAsia X currently has 14 Airbus A330 aircraft, with nine operational and the rest waiting for approval to fly after maintenance.

AirAsia X (AAX) continues to expand its China network with two weekly flights to Beijing restarting last week after almost a three-year pause.

...

Flights will ramp up from twice weekly on Thursday and Saturday to four weekly flights starting 1 June 2023 to meet growing forecast demand, further boosting travel and tourism in the region.

“More expansion in China is on the horizon for AAX as we plan to relaunch more routes and introduce more unique, less travelled destinations in China in the near future,” he concluded.

Source:
https://www.retailnews.asia/airasia-x-expands-china-network/

Keep this AAX as the trend of China reopening is real, I did not see any lockdown news only see more flights going to/from China !

My target of RM3.36 using 3x PE is intact assuming AAX can maintain their core EPS at least 28 sen registered in 4Q2022.

Why is there a need for a capital injection when they already have RM182 million in cash and only RM50 million in immediate liabilities to be paid within a year? Moreover, the company can also generate its own cash flow, so there is no need to issue more shares to obtain additional funds from shareholders.

Travel demand is back not just from China, but Australia too.

AirAsia X resumes first-ever KL route to Gold Coast, Australia after two-year hiatus, news from MalayMail as below.

https://www.malaymail.com/news/malaysia/2023/04/02/airasia-x-resumes-first-ever-kl-route-to-gold-coast-australia-after-two-year-hiatus/62771

My target of RM3.36 using 3x PE is intact assuming AAX can maintain their core EPS at least 28 sen registered in 4Q2022.

Retailers stock up due to confidence that demand is back. Remember they have to pay cash to stock up. So it is a positive sign that demand is really back.

Want to know reasons why APOLLO is worth 67% more than its current price ? Read here...

https://klse.i3investor.com/web/blog/detail/bestStocks/2023-04-04-story-h-274282357-APOLLO_3_Reasons_Why_This_Stock_Will_Surge_up_to_50

APOLLO - Worth RM6.75

One year can easily make EPS 45 sen.
Use its average PE and consumer PE of 15x, this stock is worth RM6.75.

Wah, 65% upside !

Catalyst = Kids back to school, so they buy snack again. It is economy reopening play.

https://www.theedgemarkets.com/node/661232

https://www.theedgemarkets.com/node/661162

UOB Kayhian:

Our top pick for the sector is Hartalega for its above industry operating efficiency and relative upside versus its peers.

• Upgrade to OVERWEIGHT. Recent results have succumbed to margin pressure,
registering unprecedented corporate losses across the sector. However, we expect
earnings to bottom out in 1H23 (even dipping below expectations) but ASPs are due to
finally see a positive and meaningful adjustment across competing regional producers as
well. In addition, with costs expected to moderate in 2H23, we expect losses to narrow.
Meanwhile, valuations are trading close to +1SD to merely recovering 2024 earnings,
suggesting deep value when 2025 earnings are taken into perspective. As a result, we opt
to roll over our valuations to a profitable 2024 for Kossan and Hartalega (have done so for
Top Glove) and peg earnings to five-year mean valuations. We also take the opportunity
to upgrade both to BUY.

TP of RM3.36 remains intact based on 3x PE for 2023.

Sharing article that I read over the weekend.

https://www.freemalaysiatoday.com/category/highlight/2023/03/17/no-more-turbulence-for-tony-fernandes-capital-a-airasia-x/

The 4Q2022 earnings per share of 37 sen has not reflected any of China reopening effect.

The reopening started on 8-Jan-2023. So 1Q2023 (1st Jan to 31 March) will be the first time we can see the impact of China reopening on AAX earnings.

Logically, this should boost its EPS from new contribution.

Target RM3.36 is intact. 3x PE already can get 3.36.

Still believe it will go to RM3.36 using 3x PE on RM1.12 EPS for 2023. China reopening trend is intact.

"The big money is not in the buying and the selling, but in the waiting." Quoting Charlie Munger :)

RM3.36 for AAX looks seriously realistic if China reopening continues. AAX at 3x PE means should reach RM3.36.

China reopening is a global trend for the whole 2023. Stock market looks at the future earnings for the net 6 months. The PN17 is history, everyone knows it so already priced in.

Based on the data in this article quoting data from Cirium, number of flights to China will increase 259% from January to May.

https://www.flightglobal.com/networks/airlines-bide-their-time-on-capacity-after-rapid-china-reopening/152443.article

On the way to RM3.36 ! AAX at 3x PE means should reach RM3.36, China reopening impact is definitely will bring more tourists to Malaysia. Article from Nanyang as below on China reopening impact to tourism industry in Malaysia.

https://www.klsescreener.com/v2/news/view/1124495

As I said, AAX is worth RM3.36 if you believe China tourist / Malaysia people will travel to China or other places like Australia/Hong Kong...

Few days ago, AAX restarted its flight to Shanghai again. News as below,

https://www.thestar.com.my/business/business-news/2023/03/03/airasia-x-resumes-services-to-shanghai

Back to basic lah, u see their 4Q Earnings Per Share already 37 sen. Minus one off stuff still has core EPS at 28 sen. If this performance can maintain for next few quarters, we are talking about 2023 EPS of RM1.12

How can a stock trade at less than its EPS ?

So, if you believe China tourist / Malaysia people will travel to China or other places like Australia/Hong Kong...

Use 3x PE, AirAsia X already worth RM3.36

Check the result here:

https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=3329615

Remember in Quarter 2, KIENHIN net profit surged 122% year-on-year to RM10.0 million.
It is also up 74% quarter-on-quarter

https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=3315044

This stock announced dividend every year for the past 10 years except 2021 due to Covid which hit almost all business.

Heard that restaurant business is super good during Chinese New Year ! What company will benefit from this trend ? Of course AJINOMOTO !

The most obvious trend that people really eat out is vegetable price surge more than 50% recently partially due to surge in demand during Chinese New Year. Huat Ah Ajinomoto!

Watch out for good news in 3 to 4 weeks time when the result is out. Earnings already improved quarter on quarter for April-June period and July-September period. As more people eat out, restaurant will use more Ajinomoto.

Ajinomoto is a beneficiary of economy reopening post MCO. Now almost all work from office no more WFH so this is good for Ajinomoto products consumption. 4Q2022 earnings should be good hehehe to be announced in February.