Capital A (former Air Asia)

[winston]

not vested

Clearing the fog of war from the Middle East

Maintain BUY and MYR0.75 SOTP-TP

We attended CAPITALA’s inaugural Investor Day.

The war in the Middle East and high jet fuel prices is not having an impact on its earnings.

They have had an impact on the value of its investment in AAX but CAPITALA is not at risk of having its shareholders’ equity turning negative again.

Even if we rebase our SOTP-TP to account for AAX’s last price of MYR1.19, our CAPITALA SOTP-TP of MYR0.65 still avails >40% upside.

Our base case CAPITALA SOTP-TP of MYR0.75 is premised on our AAX TP of MYR2.45.

Source: Maybank

chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://mkefactsettd.maybank-ke.com/PDFS/521469.pdf

[winston]

not vested

5099 CAPITALA (BUY)
Contained impact from higher jet fuel price

The new CapA business structure has limited exposure to rising global fuel prices.

Teleport is largely tied to passenger airlines, where a significant portion of higher fuel costs is passed on to air travelers, resulting to contained impact.

Nevertheless, Teleport has implemented fuel surcharge to customers, while demand for air cargo and e-commerce remains resilient.

Looking beyond the Iran war; ADE MRO, Teleport, and MOVE OTA are well positioned to deliver strong growth over the next few years.

We reiterate our BUY call with a lower TP of RM0.93 (from RM1.05), based on a SOP (15x FY26 FD P/E + RM2.2bn fair value for the 19.5% stake in AAX).

The uplift of PN17 status by 2H26 is expected to enhance investor confidence and spur a valuation re-rating.

Source: HLIB

[winston]

not vested

5099 CAPITALA (BUY)
Starting FY26 with profits

Following the disposal of its Aviation ops in Dec 2025, CapA sustained its second consecutive quarterly earnings at RM24.58m in 1QFY26, after RM50.9m in 4QFY25.

Management will submit 4QFY25 and 1QFY26 profit results to Bursa for its PN17 uplift potentially by Jun-Jul 2026.

Despite the ongoing Iran conflict, the group remains well-positioned for continued earnings growth, underpinned by strategic expansion initiatives and supported by AAX’s growing regional and long-haul network across ASEAN, North Asia, Australia, the Middle East, Central Asia, Europe, and Africa.

Following our earnings revision, we maintain our BUY recommendation on CapA, with a lower TP of RM0.76 (from RM0.93), based on our SOP valuation.

Source: HLIB

[winston]

not vested

5099 CAPITALA (BUY)
Exiting PN17

Following 1QFY26 core earnings of RM24.8m, CapA has now achieved two consecutive profitable quarters post-restructuring, meeting a key requirement for its PN17 upliftment, which takes effect today.

Despite the ongoing Iran war, management remains optimistic about the group’s expansion plans and earnings growth prospects.

ADE continues to expand its hangar capacity, line maintenance network, and workshop capabilities.

Teleport continues to leverage on the e-commerce boom with additional contracted capacities with third-party airlines.

MOVE is strengthening its platform ecosystem with third-party services.

We maintain our BUY recommendation on CapA with an unchanged TP of RM0.76, based on SOP valuation methodology.

Source: HLIB