Sslee blog
CapitalA: My email
Send out below email on 4 Sept 2023, 07:49
Dear Tan Kam Meng (TA Securities analyst)
Referring to your CapitaA report:
Quote;”The acquisition of minority stake in PAA has added RM2.4bn to its retained loss but the impact was mitigated by the RM1.4bn remeasurement gain from consolidating TAA operations. The increase in capital deficit would not derail its regularisation plan to uplift the company from PN17. In fact, the company has submitted the draft document for consultation to Bursa Malaysia and is confident to complete the regularisation plan by 4Q23 or 1Q24.” Unquote
My questions to you:
Question 1: From where you get the information, the company has submitted the draft document for consultation to Bursa Malaysia?
Question 2: What do you imply the increase in capital deficit would not derail its regularisation plan to uplift the company from PN17?
Question 3: Below are conditions to uplift the company from PN17, has capitalA done anything at all to comply with below conditions to uplift the company from PN17?
The PN17 regularisation plan must be in complying with the requirements under paragraph 5.4 above, the PN17 Issuer and its Principal Adviser must demonstrate to the satisfaction of the Exchange, the following:
(a) the regularisation plan is able to strengthen the financial position of the PN17 Issuer including its securities holders’ equity, gearing, net asset position, cash flow position, and address its accumulated losses position;
(b) the steps taken or proposed to be taken are comprehensive and capable of addressing the issues that had caused the PN17 Issuer to trigger the Prescribed Criteria, such that the PN17 Issuer will –
(i) no longer trigger ANY of the Prescribed Criteria upon implementation of the regularisation plan; and
(ii) not trigger ANY of the Prescribed Criteria in the near future;
(a) the regularisation plan is able to strengthen the financial position of the PN17 Issuer including its securities holders’ equity, gearing, net asset position, cash flow position, and address its accumulated losses position;
(b) the steps taken or proposed to be taken are comprehensive and capable of addressing the issues that had caused the PN17 Issuer to trigger the Prescribed Criteria, such that the PN17 Issuer will –
(i) no longer trigger ANY of the Prescribed Criteria upon implementation of the regularisation plan; and
(ii) not trigger ANY of the Prescribed Criteria in the near future;
Event that trigger PN17:
2.1 Pursuant to paragraphs 8.04(2) of the Listing Requirements, where a listed issuer triggers any one or more of the following Prescribed Criteria it must comply with the provisions of paragraph 8.04 and this Practice Note:
(a) the shareholders' equity of the listed issuer on a consolidated basis is 25% or less of the issued and paid-up capital (excluding treasury shares) of the listed issuer and such shareholders' equity is less than RM40 million;
(b) receivers or managers have been appointed over the asset of the listed issuer, its subsidiary or associated company which asset accounts for at least 50% of the total assets employed of the listed issuer on a consolidated basis;
(c) a winding up of a listed issuer's subsidiary or associated company which accounts for at least 50% of the total assets employed of the listed issuer on a consolidated basis;
(d) the auditors have expressed an adverse or disclaimer opinion in the listed issuer's latest audited financial statements;
(e) the auditors have expressed an emphasis of matter on the listed issuer's ability to continue as a going concern in the listed issuer's latest audited financial statements and the shareholders' equity of the listed issuer on a consolidated basis is 50% or less of the issued and paid-up capital (excluding treasury shares) of the listed issuer; or
(f) a default in payment by a listed issuer, its major subsidiary or major associated company, as the case may be, as announced by a listed issuer pursuant to paragraph 9.19A of the Listing Requirements and the listed issuer is unable to provide a solvency declaration to the Exchange
(a) the shareholders' equity of the listed issuer on a consolidated basis is 25% or less of the issued and paid-up capital (excluding treasury shares) of the listed issuer and such shareholders' equity is less than RM40 million;
(b) receivers or managers have been appointed over the asset of the listed issuer, its subsidiary or associated company which asset accounts for at least 50% of the total assets employed of the listed issuer on a consolidated basis;
(c) a winding up of a listed issuer's subsidiary or associated company which accounts for at least 50% of the total assets employed of the listed issuer on a consolidated basis;
(d) the auditors have expressed an adverse or disclaimer opinion in the listed issuer's latest audited financial statements;
(e) the auditors have expressed an emphasis of matter on the listed issuer's ability to continue as a going concern in the listed issuer's latest audited financial statements and the shareholders' equity of the listed issuer on a consolidated basis is 50% or less of the issued and paid-up capital (excluding treasury shares) of the listed issuer; or
(f) a default in payment by a listed issuer, its major subsidiary or major associated company, as the case may be, as announced by a listed issuer pursuant to paragraph 9.19A of the Listing Requirements and the listed issuer is unable to provide a solvency declaration to the Exchange
Question 4: Had CapitalA already done the below Prerequisite for you to write: “In fact, the company has submitted the draft document for consultation to Bursa Malaysia and is confident to complete the regularisation plan by 4Q23 or 1Q24?
(a) All agreements to be entered into with third parties as part of the regularization plan have been duly executed by all parties to such agreements; and
(b) where the regularization plan involves a compromise or arrangement with the PN17 Issuer's creditors, the PN17 Issuer has taken reasonable steps to procure the agreement-in-principle of such creditors.
(b) where the regularization plan involves a compromise or arrangement with the PN17 Issuer's creditors, the PN17 Issuer has taken reasonable steps to procure the agreement-in-principle of such creditors.
Question 5: What do you mean/where do you get the information operating cash flow inflow was stable at RM484.9mn, boosting the group’s total cash to RM735mn as at June-23?
As at 31/12/2022
Deposits, bank and cash balances: RM 469,985,000
Sales in advance: RM 1,428,011,000
As at 31/3/2023
Deposits, bank and cash balances: RM 589,594,000
Sales in advance: RM 1,546,450,000
As at 30/6/2023
Deposits, bank and cash balances: RM 735,003,000
Sales in advance: RM 2,024,943,000
Question 6: As at 30/6/2023: Deposits, bank and cash balances: RM 735,003,000. Sales in advance: RM 2,024,943,000. May I ask, using the advance sales/future revenue for current working capital how will that affect the future cash flow?
Question 7: 2Q2023 Current liabilities RM 14,208,631,000, current assets RM 2,269,900,000 thus net current liabilities RM (11,938,731,000), do you consider CapitalA is an insolvent company?
As a qualified and certified CFA your report should be based on your professional opinion/view on what was presented to you by CapitalA (Facts and Figures) and not your personal biased opinion. Quote; ”The increase in capital deficit would not derail its regularisation plan to uplift the company from PN17. In fact, the company has submitted the draft document for consultation to Bursa Malaysia and is confident to complete the regularisation plan by 4Q23 or 1Q24. The operating cash flow inflow was stable at RM484.9mn, boosting the group’s total cash to RM735mn as at June-23” Unquote
Thank you
Dear CapitalA IR,
SEPANG, 29 August 2023 – Capital A Berhad (“Capital A” or the “Group”) today reported its unaudited financial results for the quarter ended 30 June 2023 (“2Q2023”).
The Group's relentless efforts have yielded encouraging outcomes demonstrating a steadfast recovery, through the core business operations having generated RM1 billion operating cash flow in this quarter. All four business segments - Aviation, Aviation Services, Logistics and MOVE continue to show strong growth, leading the Group to post Earnings Before Interest, Tax, Depreciation and Amortisation (“EBITDA”) of RM 462 million in 2Q2023, up 325% Year-on-Year (“YoY”) while revenues increased to RM3.2 billion, representing a 115% YoY growth
The Group's relentless efforts have yielded encouraging outcomes demonstrating a steadfast recovery, through the core business operations having generated RM1 billion operating cash flow in this quarter. All four business segments - Aviation, Aviation Services, Logistics and MOVE continue to show strong growth, leading the Group to post Earnings Before Interest, Tax, Depreciation and Amortisation (“EBITDA”) of RM 462 million in 2Q2023, up 325% Year-on-Year (“YoY”) while revenues increased to RM3.2 billion, representing a 115% YoY growth
Capital A financial
- Group EBITDA up 325% YoY to RM462 mil on the back of Revenue of RM3.2 bil
- Group operating cash flow over RM1 bil.
Question 1: Why only present the positive; Group (“EBITDA”) of RM462 million in 2Q2023 and Group operating cash flow over RM1 billion to general investing public and IBs analyst but omitting to state that under MFRS 16:
(i) On the Consolidated Income Statement, expenses which were previously included under aircraft operating leases will be replaced by finance costs – lease liabilities and depreciation of right of use asset;
(ii) On the Consolidated Cash Flow Statement, operating lease rental outflows, previously recorded within net cash flow from operating activities, are classified as “net cash flow used in financing activities” for repayment of principal of lease liabilities.
2Q2023:
Depreciation of right of use assets: RM (354,185,000)
Finance costs-lease liabilities: RM (235,975,000)
Cash flows from financing activities:
Proceeds from borrowings: RM 130,989,000
Repayment of borrowing and lease liabilities: RM (1,107,380,000)
Acquisition on non-controlling interests: RM (52,061,000)
Net cash used in financing activities: RM (1,028,452,000)
Question 2: 2Q2023 Current liabilities RM 14,208,631,000, current assets RM 2,269,900,000, net current liabilities RM (11,938,731,000), what is CapitalA plan funding in the next 12 months to meet the obligation of net current liabilities of RM (11,938,731,000)?
As at 30/6/2023
Intangible assets: RM 4,698,958,000
Acquisition of a subsidiary:
Goodwill: RM 1,971,100,000
Landing rights: RM 1,971,900,000
2Q2023 - increase effective stake to 100% in Philippine Air Asia
An acquisition of goodwill of RM 1,971,100,000 sounds like a bailout for the non-controlling interest.
Question 3: Pre-acquisition what is the group effective holding in Philippine Air Asia?
Question 4: Pre-acquisition who is/are the non-controlling interest shareholder/shareholders?
Question 5: Is the deal a willing buyer, willing seller deal and why CapitalA did not publish the details of the deal?
Question 6: Looking at the dire situation of CapitalA balance sheet is “Revised official submission deadline to October 2023, aim to execute the plan in 4Q23/1Q24” achievable or another request of extension in the making?
2Q2023
Capital and reserves:
Share capital: RM 8,659,652,000
Merger deficit: RM (5,507,594,000)
Other reserves: RM 266,894,000
Foreign exchange reserve: RM (1,657,962,000)
Accumulated losses: RM (10,151,810,000)
RM (8,390,820,000)
Non-controlling interest: RM (1,813,867,000)
Total equity RM (10,204,687,000)
(a) the regularisation plan is able to strengthen the financial position of the PN17 Issuer including its securities holders’ equity, gearing, net asset position, cash flow position, and address its accumulated losses position.
Thank you
Dear Bursa,
Reference is made to the Company’s announcements dated 8 July 2020, 27 May 2021, 7 January 2022, 13 January 2022, 14 January 2022, 3 February 2022, 1 March 2022, 1 April 2022, 5 May 2022, 1 June 2022, 1 July 2022, 1 August 2022,1 September 2022, 3 October 2022, 1 November 2022, 4 November 2022, 29 November 2022, 1 December 2022 and 21 December 2022, 3 January 2023, 2 February 2023, 27 February 2023, 1 March 2023, 4 April 2023, 2 May 2023, 1 June 2023, 15 June 2023, 30 June 2023, 3 July 2023, 27 July 2023 and 1 August 2023 (“Announcements”).
(Unless otherwise stated, the words and abbreviations used herein shall have the same meaning as those defined in the Announcements.)
Pursuant to paragraph 4.1(c) of PN17 of the Main LR, the Board of Directors of the Company wishes to announce that the Company and the appointed advisers are in the midst of formulating a regularisation plan to address its financial condition.
As announced on 27 July 2023, Bursa Securities had granted the Company an extension of time of three (3) months until 7 October 2023 for the Company to submit its regularisation plan to the relevant regulatory authorities. Therefore, the Company has approximately one (1) month to submit its regularisation plan to the relevant regulatory authorities for approval to implement the same.
The Company will make the necessary announcement(s) regarding the development of the proposed regularisation plan accordingly.
This announcement is dated 1 September 2023.
This announcement is dated 1 September 2023.
Question 1:
The announcement did not mention the company has submitted the draft document for consultation to Bursa Malaysia. Can Bursa confirm whether capitalA did or did not submit a draft document for consultation?
On behalf of the Board of Directors of the Company, RHB Investment Bank Berhad wishes to announce that Bursa Malaysia Securities Berhad (“Bursa Securities”) had vide its letter dated 27 July 2023 resolved to grant the Company an extension of time of 3 months up to 7 October 2023 to submit its regularisation plan to the regulatory authorities.
The extension of time is without prejudice to Bursa Securities' right to proceed to suspend the trading of the listed securities of the Company and to de-list the Company in the event:
(i) the Company fails to submit its regularisation plan to the regulatory authorities on or before 7 October 2023;
(ii) the Company fails to obtain the approval from any of the regulatory authorities necessary for the implementation of its regularisation plan; or
(iii) the Company fails to implement its regularisation plan within the time frame or extended time frame stipulated by any of the regulatory authorities.
Upon occurrence of any of the events set out in (i) to (iii) above, Bursa Securities shall suspend the trading of the listed securities of the Company on the 6th market day after the date of notification of suspension by Bursa Securities and de-list the Company, subject to the Company's right to appeal against the delisting
This announcement is dated 27 July 2023
Question 2: Will Bursa consider a third extension or Bursa will proceed to suspend the trading of the listed securities of the Company and to de-list the Company in the event CapitalA fails to submit its regularisation plan to the regulatory authorities on or before 7 October 2023?
Thank you
Dear Datuk Muhamad Umar Swift
Bursa Malaysia CEO
In my previous email I wrote:
I am more than grateful and thrilled when I read the link below:
Annual General Meeting CORPORATE GOVERNANCE CHECKLIST FOR SHAREHOLDERS
Co-author by SC, Institutional Investors Council Malaysia and MSWG
Since then I can see a sea-change in the way AGM was conducted. My many thanks to SC, Institutional Investors Council Malaysia and MSWG
Will SC and bursa working together with Institutional Investors Council Malaysia and MSWG come up with CORPORATE GOVERNANCE CHECKLIST in addressing?
1. How listed companies should respond to news, IBs analyst report and investor enquiry.
2. IBs analyst should include the briefing material, transcript of Q&A and interview as appendix.
3. How to prevent abuse on impairment of receivables to whitewash accounting fraud or siphoning listed company money to related parties, friendly parties or to own private company
4. Should SC informed the complainer the progress/status of complaint lodged with SC and Bursa (case still active or close with no action)
May I know any plan action by Bursa on my suggestion above?
I have a bad feeling that if Bursa proceed to suspend the trading of the listed securities of the CapitalA and to de-list the CapitalA in the event CapitalA fails to submit its regularisation plan to the regulatory authorities on or before 7 October 2023, many retail investors will loss their hard earned money, no thank to the IBs analyst and CapitalA IR giving them false hope that very soon CapitalA will be uplifted from PN17.
Thank you
Have a good day
Best Regards
Lee Soon Sheng
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1 person likes this. Showing 12 of 12 comments
You might as well write to other IBs like Maybank IB, Kenanga and Hong Leong IB. Maybank mentioned that "Capital A will soon escape PN17" while Kenanga mentioned "It is on track to announce PN17 regularisation plan by Oct 2023", Hong Leong even increased their Target price from RM1.15 to RM1.45. If the analysts are more or less parroting the same thing, perhaps they have already been given snippets of the regularisation plan during the recent analyst briefing, hence why their outlook are still somewhat positive.
2023-09-04 20:37
i read other broker reports, they also mention similar things like Capital is eying to lift up the PN17 by certain timeline.....not sure why SSLee only targets TA. I think he should write in to other IBs also.
2023-09-04 23:19
BursaMaster121212 i read other broker reports, they also mention similar things like Capital is eying to lift up the PN17 by certain timeline.....not sure why SSLee only targets TA. I think he should write in to other IBs also
Nowadays even a qualified and certified CFA IBs Analyst swallow hook, line, and sinker what is presented to them during CapitalA IBs analyst briefing without question ask.
● Revised official submission deadline to October 2023, aim to execute the plan in 4Q23/1Q24
That is why I suggest IBs analyst should include the briefing material, transcript of Q&A and interview as appendix.
I only have access to TA and Kenangan Analyst report and I found TA analyst make so many fundamental error/mistake that even an accounting student should not make.
By the way if you still holding CapitalA or thinking of buying CapitalA on the dip, my advise is whatsapp my email to your broking house or remisier and ask for their opinion.
Note: My email is with below CC list:
Investor Relations • investorrelations@ta.com.my
samuel.y@maybank-ib.com
mswatch@mswg.org.my
aduan@seccom.com.my
eeditor@bizedge.com
kanagaraju.s@bizedge.com
2023-09-05 07:53
Buying up minority shares in AAX to approve issuing 5 billion AAX shares to CapA members boosted it up to 2.00.
AAX may go bust soon, if bad luck next 12 months covid or recession already insolvent, inherently loss making to begin with.
fly more die more, more time more die
=> The good news is giving BURSA a fake solvency test is not a criminal offense.
So as usual nothing will happen.
2023-09-05 09:49
"Nowadays even a qualified and certified CFA IBs Analyst swallow hook, line, and sinker what is presented to them during CapitalA IBs analyst briefing without question ask."
Now you just sound bitter that the analysts didn't share the same negative opinion as yourself.
How do you know what went on during the analyst briefings since you are obviously not invited or did you just made an assumption because they wrote things you didn't like? Give it a rest, your biases are showing.
2023-09-05 11:14
https://www.capitala.com/misc/2Q23-presentation-capitala.pdf
Financial Results Briefing:
Second Quarter 2023
29 August 2023
Capital A Corporate Highlights
● Capital A structure
- starting in June 2023, consolidated Thai AirAsia
- increased effective stake to 100% in Philippine AirAsia
- enabling a more effective strategic alignment that fortifies AAGL’s market positioning.
- better clarity on airline performance
● Capital A has arrived more than an airline
- ADE raised USD100 mil
- Teleport finalised USD35 mil loan
- Superapp finalising a termsheet to raise USD40 mil
● Capital A financial
- Group EBITDA up 325% YoY to RM462 mil on the back of Revenue of RM3.2 bil
- Group operating cash flow over RM1 bil.
● In 2Q23, operating 146 aircraft with remaining 54 aircraft aim to reactivate by end of 2023. Slower than
expected reactivation progress was due to:
- Shortage of aircraft components and cabin furnishings in the market
- Aging aircraft require extensive maintenance services such as seat removal and comprehensive cabin interior overhauls
Conclusion:
More Aircraft for growth
Aggressive Fleet Growth
● Fleet reactivation alone is not enough to sustain our growth trajectory. After reactivating our fleet, we need to grow the fleet further.
● Orderbook of 362 aircraft to be delivered over the next 12 years, beginning 2024. Of the 362, financing is secured for 73 aircraft through Sales and Leaseback (SLB) arrangement with several lessors.
● We are also leasing 15 additional aircraft - 9 to be delivered in 2024, 6 in 2025.
Fundraising Outlook
● Expecting to fundraise approximately USD800 million for aviation business growth through a combination of syndicated local club loan in Malaysia, revenue bond issuance and equity fundraise.
● Also expecting to close USD40 million for Superapp and potentially raise additional USD40 million for Teleport.
Ancillary Income Drivers
● Successful experimentation with ancillaries flow and bundling expected to deliver accretive impact upon rollout beginning 4Q23.
● New ancillary products in the pipeline to deliver additional revenue opportunities.
Growth Catalysts
● There is no bottleneck in terms of manpower resources for future fleet growth.
● In August Thailand has relaxed visa requirements for Chinese travellers, setting the stage for increased travel demand from China.
PN17
● Revised official submission deadline to October 2023, aim to execute the plan in 4Q23/1Q24
2023-09-05 11:55
anymore extension of time and CapA will no longer qualify for PN17 exit removal forever and ever as flying losses mount
fly more die more
more time more die
2023-09-05 12:47
As at 31/3/2023
Capital and reserves:
Share capital: RM 8,659,652,000
Merger deficit: RM (5,507,594,000)
Other reserves: RM 245,060,000
Foreign exchange reserve: RM (83,054,000)
Accumulated losses: RM (8,866,093,000)
Share holder RM (5,553,254,000)
Non-controlling interest: RM (3,822,946,000)
Total equity RM (9,376,200,000)
As at 30/6/2023
Capital and reserves:
Share capital: RM 8,659,652,000
Merger deficit: RM (5,507,594,000)
Other reserves: RM 266,894,000
Foreign exchange reserve: RM (1,657,962,000)
Accumulated losses: RM (10,151,810,000)
Share holder RM (8,390,820,000)
Non-controlling interest: RM (1,813,867,000)
Total equity RM (10,204,687,000)
Cash flows from financing activities:
Acquisition on non-controlling interests: RM (52,061,000)
Intangible assets: RM 4,698,958,000
Acquisition of a subsidiary:
Goodwill: RM 1,971,100,000
Landing rights: RM 1,971,900,000
2Q2023 - increase effective stake to 100% in Philippine Air Asia
An acquisition of goodwill of RM 1,971,100,000 sounds like a bailout for the non-controlling interest.
Question 3: Pre-acquisition what is the group effective holding in Philippine Air Asia?
Question 4: Pre-acquisition who is/are the non-controlling interest shareholder/shareholders?
Question 5: Is the deal a willing buyer, willing seller deal and why CapitalA did not publish the details of the deal?
i3lurker,
Is it legal for CapitalA to enter to this deal that transfer more than 2 billion negative non-controlling interest equity, to equity of capitalA shareholders without any prior annoucement, publish the contract S&P terms and conditions, salient feature, what are the rational reasons for the acwuisition and how it will impact capitalA financial account post acquisition?
Did CapitalA broke any Rule and Regulation of Bursa and SC?
I will write an official complaint to SC and Bursa next weekend urging SC/Bursa to investigate the deal.
2023-09-05 14:02
CapA assets are worth zero
is it illegal to buy something worth zero and issue 5,000,000,000 AAX shares is up to willing buyer and willing seller
2023-09-05 15:19
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CS Tan
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
i3lurker
It has no meaning.
It is very normal practise to submit a draft to BURSA first to review.
BURSA is very kind, so wants to make sure that your trend of thought is on the right track and is inline with BURSA requirements to get approval.
Otherwise last minute submit PN17 plan and everything is all wrong is already too late. BURSA treats listed companies as their friend.
No meaning at all, normal practise.
2023-09-03 13:18