Sunday, July 24, 2011

The High Flying AirAsia (Stock)


On July 21, 2011, AirAsia’s stock closed at RM3.67 in KL Stock Exchange. That was an increase of 17 sen, or about 4.8%, over the previous day. The intra-day high was RM3.70. When I noticed the price hike, I thought, “Are there some good news for AirAsia?” Then, on BBC news portal, I learned that the budget airline had just announced a joint venture with All Nippon Airways (ANA). That says it all…

AirAsia has had a 5-star performance in KLSE of late. I started to track its price since last April. On April 11, it closed at RM2.57. In just a few months, the price has increased by more than 40%! Sadly, I missed the boat and only purchased the stocks at RM3.22.

The budget airline group is expanding aggressively. This year alone, AirAsia has signed deals with Airbus to purchase 300 jets. But my concern is whether it will have money to pay dividend, given that it reinvest so much of its revenue into buying new jets. In fact, the company only declared dividend once, in 2010. AirAsia’s Debt/Equity Ratio was above 2.0 as of 1Q 2011, which was somewhat high.

As a stockholder, I hope AirAsia will do well. But as a potential flyer, I also hope that rivals such as Firefly will give it a run for its money. Kinda funny, isn’t it?


18 comments:

  1. Their CEO is calling all the right shots! :D

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  2. i think AA is performing very well and promising.. good of you to have their stock, sure earning some good money for you eh?? :)

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  3. Oh too bad you bought the stocks too late! Maybe it will go up some more? : )

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  4. I heard AirAsia is relocating its HQ to Indonesia. Is this true?

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  5. Well, I think AirAsia is operating on a very risky foundation. They get their money from customers who buy flights for next year. So they are actually using money in advance. Do you think that's kind of risky for a business?

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  6. SK
    Very little if I sell them off now.

    foongpc
    I am not aware of relocation rumor.
    Passengers make payment when they book flights, so no problem for AirAsia.

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  7. Latest news windsock is pointing to KUL and not Jakarta. According to Investopedia "The debt/equity ratio also depends on the industry in which the company operates. For example, capital-intensive industries such as auto manufacturing tend to have a debt/equity ratio above 2, while personal computer companies have a debt/equity of under 0.5." So still OK you are smelling your money already..

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  8. I didnt grab it coz the moment I saw already 3.2x hahaha... but I guess it will grow geh...

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  9. Halo, thanks for dropping by my blog earlier on~

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  10. Too many external factors can affect the share price other than the fundamentals, oil price, Europe and US development etc. However, it is still much better putting your money in stocks compared with bank deposit.

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  11. You have made close to a K with the price closing at RM4.11. What's your target price?

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  12. happysurfer
    Do you think I have 10 lots? Unfortunately I don't.

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  13. Both MAS and AA suspended today. Better times ahead for them..
    But KLSE taking a dive today, so are other bourses. May be a good time to buy in a bit later perhaps?

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  14. Wow! HappySurfer is also a big timer surfing Bursa Msia too got tips ah? Dont mind any tips be it finger tips, tip of the iceberg whatever tip will do hahaha.

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  15. AA prices will crash in 2013. Too many bigger competitors plying the same route, resulting lower profits, and high oil price thats why.

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  16. Another Smart post from you Admin :)

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