Trade Shares or Stocks in Bursa Malaysia|How to start Trading | Trade Stocks in Bursa Malaysia | How to Open Trading Account | How to Open CDS Account | What is Collateralised Trading | Discretionary Financing | Share Margin Financing | CDS Share Transfer | Securities Borrowing and Lending (SBL) | Regulated Short Selling (RSS) | Brokerage | Internet Trading Brokerage Discount | Cash Upfront Brokerage Discount | Clearing Fees | Contract Stamp Duties | Bursa Malaysia | Composite Index | Bursa News | Listed Companies News | Market News | Market Outlook

Low-fare carrier AirAsia Bhd posted a net profit of RM139.2mil in the second quarter ended June 30 compared with RM9.4mil in the previous corresponding period.

This was achieved on the back of higher passenger volume, better contribution from ancillary income as well as write-back on certain over provisions made previously.

In a filing with Bursa Malaysia yesterday, the airline said turnover in the same quarter rose 8% to RM657.4mil against RM608.4mil a year ago while earnings per share improved to 5.9 sen from 0.4 sen previously.

AirAsia’s core operating profit was a whopping 328% jump to RM128mil versus RM30mil in the second quarter last year. Core operating profit margins stood at 19.5% for the period, compared with 4.9% achieved in 2008.

The improvement was attributable to stronger ringgit against the US dollar, which led to a translation gain of RM12mil.

This, however, was partly offset by the non-recurring item related to the cost of unwinding derivative structures and disposal of assets during the quarter, which amounted to over RM6mil.

Passenger volume surged 24% in the second quarter from the year before, although average fare was lower by 19% at RM160 versus RM198 in the same period last year. Load factor was constant at 75% as a year ago.

The carrier said its strategy to continuously conduct aggressive promotions, remove administrative fees from ticket prices and enhance customer service had driven the strong traffic growth.

“The group continues to expand market share as more people switch from full-service carriers and fly with AirAsia,” it said.

AirAsia said based on the current forward booking trend, the underlying passenger demand for the third quarter was still positive.

“The group is purchasing fuel on the spot market. All other cost items are expected to remain low due to efficiency initiatives implemented and benefits of economies of scale,” it said.

It cautioned that the local currency had weakened against the greenback since end-June and if this were to continue, it might impact the company negatively.

While AirAsia remained optimistic of the prospect for the third quarter, it noted that the period was also seasonally weakest due to the fasting month.

Elsewhere, Thailand’s outlook was positive for the third quarter, with the number of passenger growth satisfactory and the operation had continued to gain market share.

AirAsia’s Thai operations enjoyed the cost benefits of the increased number of Airbus A320 planes while in Indonesia, the outlook was positive with strong passenger growth.

“The Bali-to-Perth route, which was launched in July, is enjoying strong support and the frequency has been increased from once daily to twice daily,” AirAsia said.

An aviation analyst said the results were above his core net profit forecast, mainly due to better load factor and higher ancillary income.

In a separate announcement, CIMB Investment Bank, on behalf of AirAsia, said the exchange had approved the listing of 481.1 million AirAsia shares, which arose from the proposed private placement, subject to compliance of certain conditions and regulations.

Related Posts:

• AirAsia planned to raise RM1bil cash
• AirAsia secure RM1.2bil syariah financing
• AirAsia Lost RM177million in fourth Quarter
• Barclays funding AirAsia plane purchase

PETROLIAM Nasional Bhd’s dollar bonds fell in their first day of trading after Malaysia’s state-owned oil company surprised investors by increasing the size of its sale by 80%.

The yield on Petronas 5.25% bonds due August 2019 widened to 165 basis points more than US government debt of similar maturity, from 162.5 on Thursday when the company sold a total of US$4.5bil of debt, the biggest dollar issue by an Asian company outside Japan this year, according to data compiled by Bloomberg.

Bond prices move inversely to yields.

“There are some mispricings out there,” Scott Bennett, head of credit at Aberdeen Asset Management Asia Ltd, which oversees US$1.2bil in fixed-income investments and bought the notes, said in an interview in Singapore yesterday.

Most investors thought the issue would be about US$2.5bil, “but US$4.5bil was a lot for the market to digest in one day.”

Petronas’s 10-year dollar bonds are trading at cheaper prices than notes of Swire Pacific Ltd, the Hong Kong office landlord and owner of Cathay Pacific Airways Ltd, the city’s biggest airline.

Swire’s first-half net income fell 74% as losses in its property division countered the carrier’s first profit since 2007, it said yesterday.

“You would have expected spreads for Petronas to narrow,” Bennett said.

“Why would a Hong Kong corporate produce a wider spread than Petronas which is net cash positive and already had US$30bil of cash on its balance sheet?”

Spreads on the Kuala Lumpur-based company’s dollar bonds will be tighter than their issue price in one to two weeks from now, he said.

Ten-year bonds sold in April 2008 by Swire, the 39.9% owner of Cathay, rated A- by Standard & Poor’s, are yielding 145 basis points above US Treasuries, Bloomberg data show.

A basis point is 0.01 percentage point.

Petronas, whose debt is also rated A-, the fourth-lowest investment grade by Standard & Poor’s, is benefiting from an oil price which has doubled since December, and a Malaysian economy showing signs of stabilisation after contracting for the first time since 2001 in the three months to March. – Bloomberg

Related Posts:

• No Related Posts

Investors showed a healthy appetite for the 10 structured warrants that made their debut yesterday on Bursa Malaysia, taking up 76 million units, or 7%, of the total volume traded.

Among them, Axiata-CC was the most actively traded in tandem with its underlying shares, Axiata Group Bhd.

Axiata-CC rose more than 20% to 18.5 sen from its offer price of 15 sen each while Axiata shares gained 13 sen, or 4%, to RM3.06 per share.

Gamuda-CI gained over 20% to 26.5 sen from its issue price of 22 sen. Gamuda Bhd, meanwhile, closed unchanged at RM3.34.

HKEX-H1, issued by AmInvestment Bank Bhd, is the first put warrant to be issued on Bursa. The underlying stock for the put warrants is the Hong Kong Exchanges and Clearing Ltd (HKEX).

AmInvestment also issued the call warrants on HKEX, as the pair of call and put would allow investors to take a position on the potential upsides or downsides of HKEX.

The other warrants listed yesterday were based on local stocks that have large capitalisations.

A head of research of a local brokerage said investors were likely riding on the underlying stock since entry via the structured warrants was cheaper than buying into the actual shares.

He cautioned, however, that investors might “get themselves caught” if they’re not fully aware of the mechanism of such products.

Investors might have to be satisfied with a smaller profit as the gains in structured warrants were unlikely to be of the same proportion as the underlying shares, he added.

An institutional dealer with a foreign house said interest on structured warrants was subject to market conditions and the performance of the underlying stock.

“Retail investors still need more exposure to trading in such instrument as some are not familiar with the nature of structured warrants,” he said.

Another dealer concurred, saying “retail investors are unsure of how to trade in structured warrants”, which was why trading volume remained moderate to thin for such instrument.

“Institutional and sophisticated investors are mostly the ones trading in these (warrants),” he added.

Related Posts:

• No Related Posts