AirAsia X Bhd was listed on Bursa Malaysia on 10 July 2013. It is a long-haul, low-cost affiliate carrier of the AirAsia Group. Today, it carries passengers to 26 destinations across Asia, Australia, New Zealand, the Middle East and the United States from three hubs: Kuala Lumpur, Bangkok, and Bali. As I write, AirAsia X Bhd is worth RM 1.7 billion in market capitalization.

In this article, I’ll list down 8 quick things you need to know about AirAsia X Bhd before you invest.

#1: Stock Symbol

Ticker Symbol: KLSE: AAX / KLSE: 5238
Market Capitalization: RM 1.7 Billion (4 February 2018)

Share Price: RM 0.41 (4 February 2018)

Industry: Airline

Syariah Compliant: Yes

#2: Growth Story

Carrying More Passengers
Since its listing, AirAsia X Bhd has rapidly expanded its business operations.
It had increased its size of A330-300ceo fleet from 9 in 2012 to 30 in 2016. It has maintained its fleet size at 30 in 2017. Thus, AirAsia X Bhd has grown its number of passengers carried from 2.58 billion in 2012 to 5.84 billion in 2017.

Its load factor was kept stable at around 80% over the last 6 years.

Source: Annual Reports of AirAsia X Bhd

Source: Annual Reports of AirAsia X Bhd

#3: Financials

Here are the highlights of AirAsia X Bhd’s financial results since its listing:

Higher Revenues

Since its listing, AirAsia X Bhd has reported consistent growth in revenue due to rise in passengers carried, stable average fare and income derived from the provision of ancillary services per passenger during the period. AirAsia X Bhd has grown its quarterly revenue from RM 491.1 million in Q2 2013 to RM 1.12 billion in Q3 2017.

Substantial Losses from 2013 to 2015

Despite sales growth, AirAsia X Bhd has failed to report sustainable profits to its shareholders. Evidently, it had incurred 8 quarters of losses from Q4 2013 to Q3 2015. The losses amounted to as much as RM 1.2 billion in 24 months. This was due to a string of unfortunate events such as plane crashes such as MH370, MH17, and QZ8501, price wars, negative press in Australia and also the substantial weakening of the Ringgit against the U.S. Dollar.

Rights Issue in 2015

The losses had caused AirAsia X Bhd’s shareholders’ equity to drop from RM 1.34 billion in Q4 2013 to RM 577.9 million in Q1 2015. Hence, to turnaround its financial standings, AirAsia X Bhd has raised RM 391 million from issuing Rights Shares in 2015. This enables the carrier to finance its daily operations.

Small Profits in 2016 & 1H 2017

Starting in Q4 2015, AirAsia X Bhd has reported 7 profitable quarters. It has reported high profits in Q4 2015 and Q1 2016 as a result of foreign exchange gains in the 2 quarters. However, profits reported from Q2 2016 to Q2 2017 were relatively small as AirAsia X Bhd’s margins were compressed by hikes in operating expenses which include labour cost, maintenance & overhaul, and aircraft operating lease expenses. In Q3 2017, AirAsia X Bhd has reported a loss of RM 43.3 million, the first loss incurred since Q3 2015.

Source: Quarterly Reports of Airasia X Bhd

Source: Quarterly Reports of Airasia X Bhd

#4: Balance Sheet Strength

As at 30 September 2017, AirAsia X Bhd has reported RM 1.40 billion in long-term borrowings. Thus, its debt-to-equity ratio works out to be 140.66%. This is likened to one who has RM 140.66 in long-term debt for every RM 100 the person owns.

Also, AirAsia X Bhd has reported RM 987.8 million in current assets and RM 1.97 billion in current liabilities. Thus, its current ratio is 0.50. This means it is likened to have savings equivalent to 6 months’ worth of living expenses.

#5: Future Prospects

Here are the key highlights of AirAsia X Bhd’s future prospects:

Forward Booking

From the Q3 2017 Presentation Slide, AirAsia X Bhd load factor for the first 3 months of 2018 is forecasted to remain solid at 83%, 89%, and 85%. It has the highest forecasted load factor in February 2018 due to traveling activities in conjunction with Chinese New Year.

New Routes

On 12 December 2017, AirAsia X Bhd has successfully made its maiden entry to Jeju Island, South Korea. It is the airline’s third destination in South Korea after Seoul (Incheon) and Busan. AirAsia X Bhd will begin its flight services to Jaipur in February 2018.

Fleet Plan

Starting in 2018, AirAsia X Bhd will begin to replace its fleet of A330-300ceo to A330-900neo gradually. The A330-300ceo aircraft is more fuel efficient as it expects up to 14% in fuel savings per seat. Over the next 10 years, it expects to increase its size fleet from 30 in 2017 to 73 by 2027.


Source: Presentation Slide of Q4 2016 Financial Results

#6: Valuation

As I write, AirAsia X Bhd is trading at RM 0.41 a share.

As at 30 September 2017, AirAsia X Bhd has reported having RM 0.24 in net asset value a unit. Thus, its current P/NAV works out to be 1.71.

AirAsia X Bhd has failed to deliver sustainable profits over the last 5 years. As such, it is less meaningful to calculate its P/E Ratio. It has not declared or paid out any dividends since its listing. Thus, I would expect zero dividend yields from investing in shares of AirAsia X Bhd.

#7: Investors Relation

For further enquiries or to request for additional investment information on AirAsia X Bhd’s Investors Relation matters, you may contact:

Email: aax_ir@airasia.com

Website: http://www.airasiax.com/ir_contacts.html

#8: Major Shareholders

The substantial shareholders of AirAsia X Bhd with their latest shareholdings as at 31 January 2017 are as followed:

– Tune Group Sdn Bhd: 14.29% (Direct)

– AirAsia Bhd: 13.76% (Direct)

– Datuk Kamarudin bin Meranun: 8.14% (Direct)

– Tan Sri Dr. Anthony Francis Fernandes: 2.11% (Direct)

– Lim Kian Onn: 4.77% (Indirect)

Note:

Datuk Kamarudin Bin Meranun and Tan Sri Dr. Anthony Francis Fernandes are major shareholders of both Tune Group Sdn Bhd and AirAsia Bhd. Thus, they have 28.05% indirect shareholdings in AirAsia X Bhd in addition to their respective direct shareholdings in AirAsia X Bhd.

Datuk Kamarudin bin Meranun is made the Group CEO while Tan Sri Dr. Anthony Francis Fernandes and Lim Kian Onn appointed as non-executive directors of AirAsia X Bhd.

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