Capital A’s RPK poised to soar in FY23

Kenanga Research said that by end-November 2022, Capital A would have resumed 86% and 60% of pre-pandemic domestic and international capacity, respectively, using 124 aircraft.

PETALING JAYA: Capital A Bhd system-wide revenue seat km (RPK) is expected to grow 52% to 35 billion in financial year 2023 (FY23).

According to Kenanga Research, this will reflect a 19 billion recovery from 23 billion in FY22 as air passenger demand continues to rise in 2023, judging from the encouraging load factors recorded at 159 international routes relaunched in the second quarter of 2022 (2Q22).

The research firm said by end-November 2022, Capital A would have resumed 86% and 60% of pre-pandemic domestic and international capacity, respectively, by using 124 aircraft. However, its digital segment is expected to remain loss-making.

“airasia Super App is expected to grow, underpinned by the continued resurgence of travel demand from borders reopening and tactical campaigns, alongside expected growth from airasia Food, Ride and Xpress.

“Additionally, Teleport is expected to continue expanding throughout 2023 as it adds new international lanes and delivery hubs. BigPay has also launched its digital lending platform to provide new loan products,” said Kenanga Research, which has a market perform call on the stock with a 67 sen target price.

The research firm said it continues to like Capital A for being a beneficiary to the recovery in air travel as the pandemic comes to an end, its growing digital business, and leveraging on its strong AirAsia brand and AirAsia’s existing client base. Its dynamic and visionary leadership should also help to steer it out of the current financial difficulty.

Meanwhile, Hong Leong Investment Bank (HLIB) Research said the group’s management guided it will reactivate 150 aircraft by end of 1Q23, 166 by end of 2Q23 and all 205 by end of 3Q23, from the current 126 aircraft.

Management also remains positive on the current yield environment as demand remains robust, while Cambodia operations are targeted to commence operation by October 2023.

HLIB Research maintains its “buy’’ call with an unchanged target price of 88 sen per share.

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