cash flow


Commodities’ drag on 3Q earnings

The third quarter of this year has been a disappointing period for Corporate Malaysia as results came in below expectations and analysts believing that the profit trend would unlikely get better anytime soon. Analysts said the lacklustre corporate third quarter among Bursa Malaysia-listed companies would likely extend into the last three months of the year […]

AAX net gearing ratio to remain manageable after MAHB summons

KUCHING: AirAsia X Bhd’s (AAX) net gearing ratio is expected to remain manageable even if it has to pay the summons issued by Malaysia Airports Holdings Sdn Bhd (MAHB) for the uncollected international passenger service charges (PSC), analysts say. Of note, on Tuesday, AirAsia Bhd (AirAsia), AAX’s wholly-owned subsidiary, with a Writ of Summons in […]

MAHB claims seen having little impact on AirAsia X

PETALING JAYA: The RM26.7 million claim by Malaysia Airports Holdings Bhd (MAHB) from AirAsia X Bhd (AAX) for uncollected passenger service charges (PSC) will not have any material impact on the airline’s operations.

“In the event that AAX would have to reimburse the RM26.7 million worth of uncollected PSC to MAHB, the impact would not be material to AAX’s day-to-day operations as the company has generated a net operating cash flow of RM47.3 million on average for the past three quarters. Moreover, AAX has a net gearing which is still manageable, remaining below 0.7 times after considering such payments to MAHB,” MIDF Research said in its report.

On Tuesday, AAX told Bursa Malaysia that it was served with a writ of summons by MAHB worth RM26.7 million for uncollected PSC since July 1, 2018, which is in relation to the RM23 additional charge per passenger for international passengers since AAX has only been collecting RM50 instead of RM73 per passenger.

MAHB stated that same rates should apply to both klia2 and Kuala Lumpur International Airport (KLIA). However, AAX reiterated its stance that klia2 is a low-cost airport and the charges levied should commensurate with the level of services provided.

“Future adherence to the full PSC could push average fares upwards to sustain margins but we believe this will be partly mitigated by AAX’s prudence in shifting some of the future capacity into other core markets namely, Japan, South Korea and India to factor in the slower growth from the China segment,” said MIDF Research.

It noted that a re-rating catalyst for AAX would be the possible equal downward revision of PSCs for klia2 and KLIA without any plans to reverse out any previous charges according to the Malay-sian Aviation Commission (Mavcom).

It maintained its “neutral” call on the stock with an adjusted target price of 22 sen per share.

Meanwhile, AirAsia Group Bhd’s (AAGB) deal with Castlelake LP indicates AAGB’s aspirations to invest in shifting from being asset-heavy to being more digitally focused.

“Operationally, AAGB has partnered with Airbus and Palantir to establish an integrated Big Data platform which includes forecast of predictive maintenance and efficient scheduling of parts with a potential saving of US$40,000 per aircraft per year,” said MIDF Research in a separate report.

On Tuesday, Reuters reported that Castle-lake, a US private investment firm, has signed a deal to acquire about 30 narrowbody planes from AAGB for about US$800 million (RM3.34 billion).

The deal entails the purchase of AAGB’s older aircraft, which are under lease to AAGB’s affiliated airlines and is expected to be concluded in a few weeks.

“Previously, management noted that there will be a net addition of 24 aircraft in FY19. Taking into consideration the sale of 30 aircraft to Castlelake, there would be a net reduction of AAGB’s fleet (including other AOCs) by six aircraft. As such, we expect aircraft utilisation across AAGB in FY19 to increase above the 2.2% recorded for 9MFY18,” MIDF Research said.

If the acquisition is satisfied via cash, AAGB’s cash pile would increase to about RM7.77 billion, translating into a net cash position of about RM4.57 billion. Meanwhile, the writ of summons by MAHB to AAGB worth RM9.4 million is only less than 1% of its cash pile and FY18F/FY19F earnings.

“Therefore, AAGB’s financial health will not be adversely impacted in the event that AAGB has to reimburse the monies owed to MAHB,” it added.

It maintained its “buy” call on AAGB with an unchanged target price of RM3.48 per share.

AAGB shares were down 10 sen or 3.8% to RM2.54 today, while AAX declined half a sen or 2.1% to 23 sen.

Rolls-Royce expects 2018 profit, free cash flow in upper half of forecast range

LONDON, Dec 12 — Rolls-Royce expects its 2018 group profit and free cash flow to be in the upper half of its guidance range, the British engineering company said today, shrugging off problems with some of its aircraft engines. Rolls, whose main…

Analysts still favour oil and gas players operating within brownfield space

KUCHING: Analysts are still favouring players operating within the brownfield space despite the oil and gas sector’s (O&G) third quarter of current year 2018 (3QCY18) disappointing results. The research arm of Kenanga Investment Bank Bhd (Kenanga Research) deemed the recently concluded 3QCY18 round of corporate results to be underwhelming. “While majority of the counters within […]

LTH, IRB, Felda among agencies receiving audit certificates

KUALA LUMPUR: Lembaga Tabung Haji (LTH), the Inland Revenue Board (IRB) and the Federal Land Development Authority (FELDA), are among 16 agencies which received Audit Certificates Without Reprimand with Emphasis of Matter for the financial year 2017. In addition, the Kumpulan Wang Industri Elektrik (KWIE), a trust account, was also handed an Audit Certificate Without […]

Moody’s affirms Genting’s Baa1 ratings; outlook stable

SINGAPORE, Dec 3 — Moody’s Investors Service has affirmed the Baa1 issuer rating of Genting Bhd with a stable outlook. The rating affirmation reflected Moody’s expectation of a stable consolidated cash flow generation from the group’s…

Diversified financing to boost private investment in Indonesian infrastructure

Indonesia has sought to increase private sector participation in major infrastructure projects, unveiling a series of new developments and announcing a shift in funding policy that could open the door to more international and domestic investors. In early October officials unveiled 79 infrastructure projects worth some US$42 billion as part of the Indonesia Infrastructure Investment […]

Wary whistleblower casts light on Danish bank scandal drama

COPENHAGEN, Nov 28 — When Howard Wilkinson was given a tablet as a gift from a client and his boss did not respond to questions about what he should do with it, the Briton sold it and donated the proceeds to the Tallinn Children's Hospital in…