KUALA LUMPUR (Oct 6): AirAsia Group Bhd rose three sen or 2.68% to RM 1.15 on Wednesday morning after getting approval from Danajamin Nasional Bhd for club worth up to RM 500 million as part of the Danajamin Prihatin guarantee program.
At RM 1.15, the meter was valued at RM 4.4 billion. It has seen 9.78 million shares traded at the time of writing.
Over the past year, the stock had risen nearly 80% to current levels from the closing price of 64 sen on October 6, 2020.
PublicInvest Research said in a note Wednesday that the approval gives the group some breathing space and leeway to speed up operations when interstate and international borders reopen in the near future.
Of note, Malaysia plans to allow domestic interstate travel and international travel when 90% of its adult population is fully vaccinated. This vaccination rate stood at 88% as of October 4, 2021, according to the Ministry of Health (MoH).
According to the research firm, the installation of the RM500 million club along with other fundraising and monetization exercises will have raised RM2.1 billion, within AirAsia’s forecast of 2 to 2.5. billion RM in new capital.
He said the Malaysian government’s approval is a welcome boost to AirAsia’s overall fundraising strategy to meet its cash flow needs.
Along with the group’s issuance of waivable rights of up to RM1 billion, which is expected to be completed in December 2021, the group will have sufficient liquidity and working capital to accelerate its operations, the house added. research.
Nevertheless, he understands that the group would continue to explore other available financing options and / or corporate exercises to ensure sufficient liquidity and further strengthen its capital structure.
“We are not changing our forecast and are maintaining our ‘neutral’ call on AirAsia with an unchanged target price of 0.86 sen for now,” he said, adding that the group’s share price had recently increased due to optimism surrounding the resumption of travel.
AirAsia said in a statement Tuesday that the Malaysian government guarantee via Danajamin / Syarikat Jaminan Pembiayaan Perniagaan (SJPP) is a strong signal of support for AirAsia as the group prepares to ensure it is in a position strong to once again serve the nation and the communities in which it operates, playing a key role in rebuilding the economy as the country emerges from the Covid-19 pandemic.
“Funding under the club’s installation is intended for working capital purposes, which will support personnel costs and key operating expenses such as aircraft maintenance,” he said.
AirAsia obtains approval from Danajamin for installation of RM 500m club