PETALING JAYA: Capital A Bhd
’s restructuring into a pure-play aviation services group is strengthening analysts’ conviction that the company is entering a more stable earnings phase.
Analysts have maintained a positive outlook despite market concerns over geopolitical tensions and weakness in AirAsia X Bhd’s (AAX) share price.
Maybank Investment Bank Research (Maybank IB) retained its “buy” call with a target price of 75 sen, arguing that the group’s earnings remain largely insulated from the conflict in the Middle East and the recent spike in jet fuel prices because Capital A no longer has direct airline exposure following the disposal of its aviation assets.
“The war in the Middle East and high jet fuel prices are not having an impact on its earnings.
“They have had an impact on the value of its investment in AAX, but Capital A is not at risk of having its shareholders’ equity turning negative again,” it said.
The research house pointed out that Capital A has kept its financial year 2026 internal targets unchanged, guiding for revenue of RM3.8bil, earnings before interest, tax, depreciation and amortisation (Ebitda) of RM600mil, and net operating profit of RM266mil.
Maybank IB noted that this represents about 97% of its revenue forecast and 103% of Ebitda expectations, suggesting management remains confident that operations are tracking broadly in line with analyst projections.
MBSB Research was similarly constructive, maintaining a “buy” recommendation with a slightly higher target price of 77 sen, saying the restructuring has reduced exposure to macro volatility and created a more predictable earnings base.
The research houses said the impact of higher fuel costs across Capital A’s businesses remains limited.
Maybank IB added that Asia Digital Engineering (ADE) and Santan are not affected by raw material shortages, while Teleport is able to pass on higher fuel costs through surcharges with little impact on volume.
At the same time, higher airline fares are benefiting AirAsia Move and AirAsia Next through stronger commission and licensing income.
A key concern remains on Capital A’s 20% holding in AirAsia X, whose share price has declined sharply in recent weeks.
Analysts said this will reduce Capital A shareholders’ equity, but not enough to trigger fresh financial distress.
They highlighted that management indicated equity should remain positive at about RM610mil, equivalent to 107% of share capital, which keeps the group above the threshold required to avoid slipping back into Practice Note 17 (PN17) status.
On the PN17 regularisation plan, an analyst told StarBiz that the exit timeline may now shift to August 2026, as Capital A may need to demonstrate two consecutive profitable quarters for this year before Bursa Malaysia grants an upliftment.
“Management is seeking regulatory flexibility to rely on earlier profitability, which could shorten the process.
“We continue to see growth led by ADE, AirAsia Move, and Teleport. ADE remains the largest earnings contributor, supported by expansion in maintenance capacity, while AirAsia Move is expected to scale further through higher monetisation of its travel platform.
“Teleport, meanwhile, is benefiting from rising cross-border eCommerce demand and expanding airline partnerships.
“As such, Capital A’s value is increasingly tied to aviation services rather than airline operations alone,” the analyst said.
