KUALA LUMPUR – Capital A Bhd shares fell in early trade today following its announcement of the disposal of its remaining 16.33% stake in AirAsia (India) Private Ltd (AAI) for gross proceeds of RM89.23 million.
At 10.31am, the shares eased half-a-sen to 59 sen with 1.51 million shares changing hands.
Yesterday, AirAsia Aviation Group Ltd, the holding company of Capital A’s airline group, entered into a share purchase agreement with Air India Ltd to sell the remaining 16.33% stake held in AAI to Air India.
Air India is an affiliate of Tata Sons Private Ltd.
Hong Leong Investment Bank (HLIB) in a note said while it pains Capital A to completely exit the Indian market, the investment bank believes this is a positive short-term measure for Capital A to focus on its core Asean market for now.
Capital A will receive RM89.23 million to strengthen its cash coffers and address its ongoing liquidity concern as the group continues to recover from the Covid-19 pandemic.
Almost all countries (except for China) have opened up their borders and relaxed travel restrictions.
“We believe Capital A will be able to leverage the recovery of regional air travel demand.
“Over the longer term, when Capital A’s balance sheet has strengthened, we believe the airline company will again explore opportunities into expanding the group’s network and market reach,” HLIB said.
The investment bank has maintained a “buy” call recommendation on Capital A with an unchanged target price of 88 sen as the group leverages on the recovery of air travel demand in the region with countries further reopening their borders and the easing of jet fuel prices. – Bernama, November 3, 2022
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