This is a personal investment blog where I keep important research articles relating to KLSE companies.
KENANGA Research - Airasia, Zeland, GenM
Author:kltrader | Publish date: Tue, 3 Jul 2012, 09:59 AM
Airasia Bhd may consider exiting Airasia X when the latter undertakes its IPO, which could be as early as the 4QFY 2012. It was reported earlier that Virgin Atlantic was dispoing of its 10% stake in Airasia X to existing shareholders Aero Ventures Sdn Bhd and Airasia. With Virgin’s exit, Airasia owns about 20% equity while Japan based orix Group and Bahrain based Manara Consortium holds about another 20%. Aero Ventures Sdn Bhd controlled by Tan Sri Tony, Dtuk Kamaruddin Meranun and several prominent Malaysians, own the remaining 60% of Airasia X.
Airasia’s CEO said Airasia would not increase the stake for sure, if anything it will remain at 20% stake. If they go for an IPO, it may consider exiting it but it do not think it will increase it stake to more than 20%.
It is looking at paying rm25 million in back taxes in Indonesia. This comprises potential tax payable and related tax penalties for its wholly owned subsidiary in Indonesia Zeland Holdings Sdn Bhd.
The amount is substantial for Zeland, considering the company’s net profit for the Fy2012 ended March 31was rm14.66 million or 2.6 cents per share. In fact the company made steep losses of rm258 million or 45.7 sen per share for FY2011. It was in the red for its fourth quarter ended March 31 2012 when it reported a net loss of rm60.4 million.
The potential exposure of approximately rm25 million continues to be reflected as a contingent liability in the company’s financial statement.
MMC Corp is the single largest shareholder with a 39.25% stake in Zeland, which specializes in power plant, construction.
Its investment in Bahamas some 30 mins flight from Miami, Florida is seen as something of a back up plan to ongoing efforts to expand its presence in US. This is part of its bigger plan to encourage the Miami government to approve the legislative to legalize casinos, given that the island of Bimini would be the closet offshore casino to South Florida.
Genting’ effort to secure a casino resort license in Miami hit a roadblock earlier 2012 when a bill to pave the way for license was pulled off ahead of a crucial legislative vote due to wavering support ahead of the US general election in Nov 2012.
The US$24 million outlay for the deal with RAV Bahamas for the casino as insignificant relative to its over rm1 billion net cash standing.
Do not expect the impact from this venture to be significant. Positive developments in potentially bigger cash churning ventures like Miami and New York are the kind of good news looking to re rating the stock. Investors are also watching out for Genting’s game plan with its investment in Australia listed Echo Entertainment.