Capital A Bhd’s (Capital A) announced its proposed plan to regularise its financial position, which includes a capital reduction of up to RM6bn to set off against the accumulated losses of the Group. This aims to facilitate Capital A’s exit from its Practice Note 17 (PN17) status, and enable future growth and strategic expansion, following the disposal of its aviation business to AirAsia X (AAX). We are positive with the restructuring plan as it outlines a clear pathway to turn around its operations. Additionally, the group is expected to benefit from favorable factors such as Ringgit appreciation, robust air travel demand, and lower jet fuel prices. Therefore, we upgrade our call to an Outperform with target price of RM1.57 based on sum-of-parts valuation.
Source: PublicInvest Research - 24 Oct 2024
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