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 miti.gov.my 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.