PETALING JAYA: AirAsia Group Bhd shares rose 8% on Thursday after the low-cost carrier announced a 90-sen special dividend payout totalling more than RM3bil.
The dividend payout quantum came as a surprise to a few analysts, with CGSCIMB surmising that it would not be easy for AirAsia to pay out further special dividends beyond 90 sen in the future.
“After deducting RM3bil from the payment of the 90-sen special dividend, this would leave AirAsia with a gross cash balance of RM1bil (excluding any regular free cash-flow accumulation), representing 9% of AirAsia’s annual cash operating costs, which we consider to be the required bare minimum.
“Continued losses at PT Indonesia AirAsia and India AirAsia may require AirAsia to provide further equity injection and/or continuous working capital support. So, in our view, AirAsia is unlikely to declare additional special dividends in the near future beyond the 90 sen just announced,” it said in a report yesterday.
AirAsia closed 22 sen up to RM2.85 yesterday. The low-cost carrier’s dividend is equivalent to 34% of dividend yields from the last traded price of its shares at RM2.63, before it was suspended on Wednesday.
The cash splash became possible after the airline group sold its 25 aircraft to US private investment firm Castlelake LP in a deal worth US$768mil (RM3.22bil) last year.
AirAsia had, on April 10, dished out 12 sen per share or RM401.04mil in dividends to its shareholders, according to a filing with Bursa Malaysia.
Meanwhile, for the first quarter ended March 31, AirAsia posted a 92% drop in net profit to RM96.09mil compared with the RM1.14bil recorded last year, when it recorded extraordinary gains.
Revenue for the quarter was 13% higher to RM2.88bil from RM2.56bil previously, attributable to an 18% increase in total passengers carried and an improvement in the load factor of 88%.
Kenanga Research said the low-cost carrier’s results were within expectations. “We deem the results to be broadly in line, as we expect a stronger performance in subsequent quarters due to expanded capacity and seasonality.”
Following a briefing with AirAsia, the research house said the company’s management is looking at a net addition of 18 aircraft in its bid to grow market share, and remains hopeful that markets like Indonesia would see further improvements.
“On its digital transformation front, it is actively engaging with its partners, namely, Google, Airbus (Skywise) and Palantir, to integrate machine-learning into its Big Data platform to improve airline operations. “This would lead to cost savings in the future via automation, which leads to rationalisations that are part of the company’s direction. Earnings estimates are unchanged.”
AllianceDBS Research, meanwhile, said it is adjusting its earnings forecast in light of the adoption of MFRS 16.
“We have made changes to our earnings as we input higher depreciation and finance costs in line with the accounting standards of MFRS 16. This has impacted earnings, but the book value impact is minimal as the introduction of lease liabilities is offset by the right use of assets.
“All in all, our earnings have been cut by 50% for 2019 and 2020,” said the research house.