The counter gained as much as 8.5 sen or 8.9% to RM1.04 in today’s morning session.
As at 3.50pm, the counter was the fourth most actively traded stock on Bursa Malaysia, with 73.16 million shares exchanging hands.
Its share price has since retreated to 97 sen, 1.5 sen or 1.57% higher, giving it a market capitalisation of RM4.08 billion.
Yesterday, the aviation group posted a Q2 FY2023 net profit of RM1.12 billion, from a net loss of RM931.22 million in the same quarter last year.
The turnaround was mainly attributed to the strong recovery in demand from both domestic and international travel, according to the filing.
In its filing with Bursa, the group said the rise in earnings was contributed by the gain of RM1.37 billion from the remeasurement of Asia Aviation Public Company Ltd from an associate to a subsidiary.
Another factor was the reduction in foreign exchange loss, from RM345.4 million in Q2 FY2022 to RM158.6 million in Q2 FY2023.
Positive outlook
Hong Leong Investment Bank (HLIB) Research has maintained its “buy” rating on Capital A, with a revised target price (TP) of RM1.45, from RM1.15 previously.
“We expect further potential upside to our TP should the Practice Note 17 regularisation plan be successfully executed,” HLIB said.
It remains confident with the group’s outlook due to the recovery of air travel demand and reopening of international borders.
“Capital A will only be able to fully reactivate the group’s 204 aircrafts by December 2023 or January 2024 due to MRO (maintenance, repair, and operations) constraints,” said HLIB.
“The management also remains positive on the current yield environment, as demand remains healthy, while airlines have become less competitive. The group’s Cambodian operations are targeted to commence operations by November 2023,” it added.
Less optimistic view
In contrast, MIDF Research has reduced Capital A’s TP to 90 sen from RM1 previously.
“With its current valuation aligning closely with its pre-Covid-19 historical mean, we maintain our ‘neutral’ call on the stock.
“A key driving factor would be faster-than-expected restoration of its network and capacity to pre-Covid-19 levels,” MIDF said in a note.
MIDF also slashed its earnings forecasts for Capital A for FY2023 to FY2025, accounting for the accounting consolidation of AAV, which operates Thai AirAsia.
“With the addition of more seat capacity, the load factor is projected to remain strong at close to 90%.
“The delay in full fleet reactivation, initially set for August 2023, is due to shortages of components and cabin furnishing, as well as maintenance needs for ageing aircraft,” it said.
The research house is also optimistic about the upward trajectory of ancillary revenue per pax, standing at RM49 in Q2 FY2023 – up 37% versus 2019 levels – driven by strong new product initiatives and dynamic pricing.