Saturday, November 3, 2012

Air Asia X IPOs, Is it the repeat of Astro?

Hello Peeps!

How's thing going? Today i would like to highlight Malaysia newest IPOs AIR ASIA X. After the incident with Astro IPO, i dont think many people will be buying IPO like crazy. Well the Astro loss after the IPO does hurt lot of retail investor and this happen i believe because they thought that they can gain easy money just by buying IPO like what happen prior with Felda venture and IHH. But what they didnt know is that how strong is the company? Being famous and having a strong brand name does not mean that its a good stock to invest. Have you ever think why Astro got listed again??

This maybe the shorter version but they going listed again because their previous investment holding are bleeding badly because of their failed business in Indonesia. Therefore they created a different entity under its subsidiaries and make them go listed. That why many big investment firm didnt invest in them. Eventhough there are story that the Astro IPOs is over subscribe but most of the buyers is from the hedge fund area which means they are looking into short term holdings of the stocks.

So coming back to Air Asia X story, the significant of the Astro story to Air Asia X is that Air Asia X go listed because they want to get on the Hot IPOs trend that happening in Malysia right now. Its a great opportunities for them to get more money to in the journey of expending their destination. Air Asia x the medium haul budget carrier 33.3% of its shares or 790.12 million shares and according to Reuters  the IPOs will able to collect around US$ 250M or RM750M. According to Reuters own calculation, the each shares would  sum out into 97sen per share however AirAsia X have not given any pricing detail and only will be fixed after book building exercise.

In term of their expansion plan, they are going to expand their fleet from 11 to 18 by next year and going to add another 7 in 2014 according to its CEO, Azlan Osman Rani. After they withdrew from Delhi, Mumbai, London and Paris as the result of high fuel prices, exorbitant taxes, and weak travel demand, they are trying to look at potential growing into Asia Pacific's Region especially Japan, Korea and China. This shown that AirAsia cannot sustain itself in an advantages situation because they don't have a bottomless pocket and that is how their business plan is. 'Business like usual'.

If looking to their potential threat, it would be the Malindo Airline. Our neighbor’s country aircraft going to be set in Malaysia as a next low cost carrier aircraft. In the short run Malindo will not be able to beat AirAsia because of their strong brand name and business strategy but in it will still effect the sale volume of Air Asia especially for people going to Indonesia. These maybe the reason why they trying to push the expansion of AIR ASIA X. 

As a conclusion Air Asia X already have a strong brand name, strong technology and they have their own expansion plan. All these are the same as Astro. Therefore depends for you to take it or not. Miti website have already gave out application for Bumiputera to apply for this IPOs. Anyone interested can start applying for it at until 6 Oct only.

“According to the draft prospectus on the Securities Commission website, the 685.679 million IPO shares comprise of up to 197.530 million offer shares and 227.407 million issue shares to Malaysian institutional and selected investors and foreign institutional and selected investors at the institutional price.

Another 260.740 million issue shares would be offered to Bumiputera institutional and selected investors at the institutional price.

The retail offering would comprise of 104.444 million shares, or 4.4% of the enlarged issued and paid-up share capital, at the retail price.

This would involve 33.333 million issue shares, or about 1.4% of the enlarged issued and paid-up share capital while another 71.111 million issue shares, or 3.0% of the enlarged issued and paid-up share capital, would be offered to the Malaysian public of which 50% are reserved for subscription by Bumiputera public. (sources: biz.thestars)”

Just as a heads up, last week Air Asia have stated that they will not exercise their option to buy AiAsiaX in the Bursa Announcement. If they believe the price can goes up why didn’t they exercise that option now? Just as a remark for you to think before invest.

Friday, November 2, 2012



So how much do you know about the market? Market in this context would be the equity market in malaysia listed in Bursa. I am not a big fan of Bond or any fixed asset but this may be because i am still not well inform of that asset class. Whatever it is, its a knowledge worth knowing.

Bursa Malaysia :  is an exchange holding company approved under Section 15 of the Capital Markets and Services Act 2007. It operates a fully integrated exchange, offering the complete range of exchange-related services including trading, clearing, settlement and depository services. (Source Wikipedia)

Bursa Malaysia or before known as Kuala Lumpur Stock Exchange (KLSE) 1930. So this the place where all public company are listed and are trading while the SC or securities commissioner will regulate the market. What people not in this industry doesn't know is that like the Dow Jones in US, we also have our FBM100 or FBMKLCI where top 100 and top 30 company are listed. We then have the ACE market where the not so good or small/medium market cap are. So we as an investor look at these FBM100 and FBMKLCI graph to gauge the performance of the market.

Here you can see the graph of KLCI are pointing all high since January. KLCI consist of top 30 listed company in Malaysia. So if everyone is doing ok so the graph will keep going up. This position of the market is what we called the bull market.

Everything is going up and dong A-okay but as seen in the US market history and as told by Benjamin Graham the mentor of legendary Fund manager Warren Buffet, is that what ever goes up will goes down according to his book the Intelligent Investor.

So for me personally i wont take position of the market right now. The economy of Malaysia is going good especially with all the project underway and supported by the country's government. BUT! The election have not ended yet. The leadership can change hands and may lead to review of the award given to certain company and this may lead to a slow growth of the economy.

Well uncertainty is there but there many other things for us to concern. As a Malaysian i just hope the country doesn't not fall into people that want to take advantage of their position.


Something new


I am planning to use this blog as a platform for me to give my opinion on Malaysia market + putting about anything i want. I am nothing but a novice.