In a statement, the research house said this strategic move will enable the group to focus on aviation services and digital ventures that synergise and enhance its core passenger airline business.
In a filing with Bursa Malaysia yesterday, it said the group entered into a conditional share sale and purchase agreement with AirAsia Group Sdn Bhd (AAG) to dispose of AAAGL for RM3 billion and AAB disposal for RM3.8 billion.
“The proposed corporate exercises will aid the group in its transition out of its PN17 status within the June 20, 2024 deadline to submit its plan to Bursa Malaysia.
“No adjustments have been made to our earnings estimates thus far as the exercises are subject to requisite approvals,” it said.
MIDF Research noted that the management intends to begin sharing profit guidance for its digital entities during the briefing of its first quarter of 2024 (Q1 2024) results.
The completion of the aviation disposal/acquisition is anticipated by the third quarter of 2024 (Q3 2024), with the regularisation plan expected to be finalised by the first quarter of 2025 (Q1 2025).
“We maintain our ‘neutral’ stance on the stock with an unchanged target price (TP) of RM0.74,” it said.
Meanwhile, Hong Leong Investment Bank said it gives a positive stance on the exercise mainly on the streamlining of the aviation segments to be consolidated under AAG, in strengthening the business model for long haul-short haul integration, with a new medium-haul segment as the intermediary, by leveraging the new A321 fleets.
“AAG will be in a much stronger position to compete effectively against the established full-service carriers such as Singapore Airlines, Emirates and Japan Airlines.
“Shareholders of Capital A will benefit from its exit from PN17 status.
“Especially on Capital A’s new focus on the growth of the aviation support business segments, leveraging onto AAG’s growth and new shareholdings in AAG, to ride on the expected growth of low-cost carriers globally,” it added.
Hong Leong Investment Bank has maintained a ‘buy’ call with a higher TP of RM1.68.
Capital A Bhd shares on Bursa Malaysia were marginally down during midmorning trade today after the company announced the proposed disposals of its 100% equity interest in AAAGL and AAB (Both are wholly owned subsidiaries of Capital A).
At 11am, Capital A eased 0.5 sen to 69.5 sen with 5.06 million shares changing hands.
At the time of writing, Capital A’s share price was unchanged at 70 sen, giving the group a market capitalisation of RM 2.96 billion.