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AirAsia Bhd posted a 10.31% rise in net profit to RM224.11mil for the first quarter ended March 31 (Q1) compared with the same period a year ago on higher passenger volumes in Malaysia, Thailand and Indonesia.

Revenue increased 10.15% to RM878.04mil compared with the same period a year ago.

Passenger volume grew 17%, supported by average fares that were 13% lower at RM173 compared with RM198 while seat passenger load factor was 4% higher at 74%.

“We’re very pleased with the quarter’s performance, there’s very strong topline growth,” AirAsia chief executive officer Datuk Seri Tony Fernandes said in a teleconference with analysts and reporters yesterday.

He said the bottomline received a boost from a pick-up in ancillary revenue. “It was a very strong contributor to our bottomline.”

File pic: AirAsia group chief executive officer Datuk Seri Tony Fernandes speaking at the launch of online travel portal AirAsiaGo on May 25.

He said Thai AirAsia, a jointly controlled entity of the company, and PT Indonesia AirAsia, an associate company, were also profitable.

Fernandes also said there would be annoucements on AirAsia’s relationship with the Thai and Indonesian companies as well as long-haul operator AirAsia X Sdn Bhd in the next month or two.

“There will be plans to have the operations in both countries to be separately financed and a transfer of the debt to the respective companies,” he said.

Fernandes said the outlook was looking “very good” for Q2, with Q3 also looking “very strong” compared with last year, including for Thailand. “My gut feel is that fares will be slightly up but this will not affect load and demand.”

Thai AirAsia net profit jumped 109.27% to 622.86 million baht compared with a year ago, supported by gains in foreign exchange (forex) translation of 222 million baht. Revenue was up 29.73% to 3.10 billion baht while core operating profit rose 34.60% to 400.62 million baht.

Indonesia AirAsia posted a net profit of 4.64 billion rupiah compared with a net loss of 64.63 billion rupiah in the same period last year.

The Indonesian operations saw gains from forex translation of 39 billion rupiah and recorded a core operating loss of 34 billion rupiah after excluding the forex gains.

Meanwhile, AirAsia told Bursa Malaysia the financial due diligence on VietJet Aviation Joint Stock Co has been completed.

“Application is being made to the Civil Aviation Authority of Vietnam for the Air Operating Certificate that will permit the operation of a low-cost carrier in Vietnam based on the already proven business model of AirAsia in other Asean countries,” it said.

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Shares of Kenmark Industrial Co (M) Bhd were suspended after plunging 68%, or 22 sen, to 10.5 sen on news that the company’s premises had been sealed, a receiver would be appointed for its paper business and its Taiwanese major shareholder, who is the managing director, had not been contactable since last Tuesday.

Two independent directors – Zainabon @ Zainab Abu Bakar (who is also chairman of the company) and Yeunh Wee Tiong – met up with Bursa Malaysia officials yesterday morning to explain the situation and were told by the exchange to make the necessary and relevant disclosures.

“We met with the independent directors, external auditors and officials of Kenmark and stated our concern on the affairs of the company.

“The exchange is closely monitoring the situation and engaging with them on their actions,’’ a Bursa official said in a statement to StarBiz.

Bursa Malaysia issued an unusual market activity (UMA) query yesterday over the sharp fall in Kenmark’s share price and high transaction volume. Kenmark shares fell 19 sen to 14 sen by 9.15 am yesterday and dropped another 3.5 sen before it was suspended at 10.10 am. The stock closed at 10.5 sen on a volume of 71.9 million shares traded.

Trading in the shares will resume today.

Kenmark, in response to the UMA, said Goh Kim Chon the deputy general manager, and the finance and administration manager had resigned from the company and, therefore, the financial results were not presented at the audit committee meeting.

The independent directors of the audit committee, namely Zainabon and Yeunh, were the only directors present at the audit meeting last Thursday. The managing director, James Hwang, and Goh, who were the usual management representatives to the audit committee meeting, did not turn up for the meeting.

“It was then found out that the deputy GM had already resigned and the managing director was uncontactable.

“The audit committee meeting could not proceed as there was no representation from management and the fourth quarter results that was to be discussed was not made available.

“The independent directors tried to contact Hwang on his mobile phone but was unsuccessful. Attempts to contact the MD and executive directors at the Taiwan office via telephone and fax failed,’’ Kenmark told Bursa in its reply.

Not satisfied with what was going on, Zainabon and Yeunh visited the company’s premises at Port Klang last Saturday but found it guarded and sealed.

However, on Wednesday, some suppliers had recovered their stock and raw material from the company premises.

EON Bank Bhd, one of the creditors, had placed its own security guard at the premises. Kenmark told Bursa that the bank would appoint a receiver to take over the assets of the company. This was conveyed to Kenmark Paper Sdn Bhd, a wholly-owned subsidiary, by EON’s solicitors via a letter dated May 28.

At group level, total borrowings stand at RM143.5mil and it has cash reserves of US$284,000, according to its 2009 annual report.

Hwang, who is the major shareholder and MD, holds a 27.61% equity stake in Kenmark.

Three other directors who are also Taiwanese – Huang Ching Hsiang and Chen Wen-Ling (both non-independent non-executive directors) as well as Chang Chin-Chuan, (executive director) are not contactable, the company told Bursa yesterday.

Chen has an 18.7% equity stake while Chang holds a 0.14% stake in the company. Collectively, the three hold 46.45% equity stake in Kenmark.

Hwang and Huang are brothers, as per the company’s 2009 annual report.

Kenmark’s website states that the company is involved in the manufacturing of computer workstations and cabinets, furniture, printing of packaging materials and distribution of consumer products, as well as investment holding.

It is also into plastic injection for furniture parts, and assembly and distribution of liquid crystal display.

The company’s corporate office and factories are located at Lot 11, Lingkaran Sultan Muhamed, Kawasan Perindustrian Bandar Sultan Sulaiman, Port Klang. Kenmark had also relocated part of its manufacturing facilities to Vietnam to take advantage of its relatively cheap and abundant labour force.

The four Taiwanese directors were not contactable even at the Vietnam office and Hwang has not been reachable since May 25, the statement said.

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After months of intense speculation, the board of Affin Holdings Bhd has confirmed that it has submitted an application to the central bank to seek approval for negotiations with EON Capital Bhd (EON Cap) and/or its major shareholders for the proposed buyout of the latter.

The financial group whose major shareholder is Lembaga Tabung Angkatan Tentera was responding to recent StarBiz articles yesterday and told Bursa Malaysia that it had submitted the application but the decision from Bank Negara was “still pending”.

“The board is unable to provide any details of the proposed acquisition of an interest in EON Cap as they are still subject to, among others, the approval of Bank Negara,” it said in a late evening statement to the stock exchange.

The application was made on May 4, it added.

Affin, the second smallest banking group in the country said it would make further and timely announcements once the details of the proposed acquisition had been finalised.

On Friday, StarBiz reported that Affin had sought the green light from Bank Negara to make a general offer (GO) for EON Cap and that the central bank “was assessing the deal”.

The deal would likely be a combination of cash and shares, it was reported.

In an earlier financial results statement to Bursa Malaysia yesterday, Affin’s chairman Tan Sri Mohd Zahidi Zainuddin said the group was “always on the lookout to explore possibilities to propel its business locally and regionally”.

He did not elaborate.

Affin’s name had surfaced as a possible contender for the EON Cap buyout months ago but so far, Hong Leong Bank Bhd (HLB) is the only one which has put forward a solid cash offer for EON Cap, the third smallest bank by assets in Malaysia.

HLB’s proposed offer of RM5.06bil which works out to RM7.30 per share is thought by the board of EON Cap to be in the best interest of the group and is scheduled to be tabled before shareholders at an upcoming EGM, said to take place earliest by the end of next month.

This, despite EON Cap’s independent financial adviser, Credit Suisse Securities (M) Sdn Bhd, saying that HLB’s offer is “not fair from a financial perspective’’.

“This (Affin’s pending application) obviously creates a dilemma for HLB,” an analyst who tracks the HLB-EON Cap saga said.

Critics say Affin, given its size, may face problems in funding the proposed exercise.

“Based on our estimates, Affin would almost certainly need to raise capital should it get the green light from Bank Negara for the deal,” Hwang DBS said in a report yesterday.

Affin’s Tier-1 capital adequacy ratio would drop from 12.7% currently to below 3% (assuming the acquisition is not funded by a rights issue), Hwang DBS said. While with a rights issue, Affin would be able to restore its capital position but there would be significant dilution to earnings per share and book value at the new merged entity, based on our calculations, it said.

The Affin proposal is thought to be linked to Ng Wing Fai, a board member of EON Cap who represents Primus Pacific Partners Ltd which has a 20.2% stake in EON Cap. Because the proposed plan would involve a share option, this means that the company would not have to crystallise its losses given its high entry point investment of RM9.55 per share.

HLB’s offer on the hand is backed by the other major shareholders of EON Cap namely Rin Kei Mei and Tan Sri Tiong Hiew King who are keen sellers.

Meanwhile, Affin yesterday reported for its first quarter ended March 31 a net profit of RM135.3mil or 9.06 sen per share, 48% higher than the net profit of RM91.6mil or 6.13 sen per share recorded in the same quarter last year following higher net interest , Islamic banking and other operating income.

Revenue for the period under review stood at RM520mil against RM499mil last year.

Analysts said yesterday’s results made up 47% of full-year consensus estimates and was above expectations.

The group said it was “on track” to achieving its headline key performance indicators (KPIs) for the current financial year among which were returns on equity (8.4%), return on assets (1.0%) and net non-performing loan ratio (1.9%).

For the just concluded quarter, all three ratios stood at 2.8%, 0.3% and 3.4%. Cost-to-income ratio improved to 44% from 50% last year.

“Barring any unforeseen circumstances, the group is expected to perform well and achieve satisfactory results for FY10,” Affin said.

For the quarter under review, the increase in net interest, Islamic banking and other operating income totalled RM46mil, Affin said while allowance for impairment on loans, advances and financing was also lower compared to last year at RM8.5mil.

Its principal subsidiary, Affin Bank reported a pre-tax profit of RM139mil compared to RM100.5mil while Affin Investment Bank Bhd also reported higher pre-tax profit of RM27.9mil compared with RM16.4mil earlier.

AXA-Affin Life Insurance Bhd also reported a higher pre-tax profit of RM300,000 while AXA-Affin General Insurance Bhd made a lower pre-tax profit of RM4mil largely due to higher net claims.

Shares in EON Cap, Affin and HLB were all up by 14 sen, 2 sen and 9 sen to RM7.01, RM2.90 and RM8.55 respectively at the market close yesterday.

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