Capital A Berhad (Capital A) 1QFY22 operating statistics showed continued recoveries with passenger volume for the consolidated aircraft operating certificate (AOC) operations (Malaysia, Indonesia and Philippines) increasing by 37.6% QoQ to 3.7m. The passenger load for AOC, while remaining healthy at 76%, fell 4ppts as the Group introduced additional capacity (+45.6% QoQ) to support the surge in demand. Meanwhile, Thailand (TAA) operations reported load factor of 73% with capacity increasing by 31.2% QoQ. While demand is expected to continue to improve, we remain wary over the Group’s PN17 status and its ability to turn around its financial position within the next 12 months. We maintain our earnings estimates and Neutral call on Capital A, with target price of RM0.69 unchanged.

• Capital A’s consolidated operations reported a substantial increase in passengers carried in 1QFY22 to 3.75m (YoY: +284%, QoQ: +37.6%), in-line with its increase in available seat per km (ASK) to 4,288m (YoY: +223%, QoQ: +53.9%). The improvement is attributable to strong domestic travel rebound and further easing of travel restrictions in the region. Philippines (PAA) continued to record the Group’s highest quarterly load factor at 86%, increasing by 1.1ppts QoQ. Passenger volume and ASK increased by 57.9% and 55.1% respectively, supported by the huge summer demand following the Philippines government’s confirmation of further relaxed travel protocols. For the Indonesian (IAA) unit, it posted commendable load factor of 76% for the quarter with passenger volume and ASK growing by 126% and 141%. The improvement is due to additional frequency added for domestic flights, particularly Jakarta to Denpasar and between Jakarta and Medan, to meet huge pent-up demand.

• Associates’ performance. TAA reported a load factor of 73% on the back of passenger volume and ASK growing by 26.4% QoQ and 34.7% QoQ respectively. The improvement was mainly due to strong recovery in travel demand and the easing of the entry rules as well as the reopening of the Thailand Pass (Test & Go).

Source: PublicInvest Research - 29 Apr 2022