The big drop in share price triggered Bursa to suspend its short selling.

KUALA LUMPUR (Aug 29): AirAsia X Bhd (AAX), which is seeking more time to unveil its regulation plan, saw its shares gap down from its near four-and-a-half-year peak of RM2.51 after the release of its quarterly results the day before.

The low-cost carrier's stock fell to RM2.05, down 17% from Monday's close of RM2.48, in just five minutes after opening at RM2.27.

The big drop in share price triggered the stock exchange to suspend its short selling, both proprietary day trading (PDT) and intraday short selling (IDSS), on the airline's counter.

"The short selling under the PDT and IDSS will only be activated the following trading day, Wednesday, Aug 30, at 8.30am," said Bursa Malaysia in a filing.

In those five minutes of trading, AAX lost RM192.25 million from its market capitalisation (cap).

Nonetheless, the airline managed to recoup some lost ground after the suspension of short selling activities, to end the trading day at RM2.25, down 23 sen or 9.27% from the previous day's close and still the biggest fall since March 23, when the stock slid nearly 11%. AAX's market cap has now shrunk to RM1 billion.

Despite the heavy selling, the aviation stock has climbed 295% year to date. The rise is even bigger — at 500% — if measured from its low of 38 sen in November last year.

Maybank Investment Bank (Maybank IB) cut its target price for AAX by more than 15% to RM3.01 from RM3.58, as it trimmed earnings forecasts by 16% for the financial year ending Dec 31, 2023 (FY2023), and by 29% for FY2024 and by 26% for FY2025.

The low-cost airline posted its fourth consecutive quarterly net profit of RM5.54 million for the second quarter ended June 30 (2QFY2023), compared to a massive net loss of RM652.52 million a year ago, as quarterly revenue soared 379% to RM512.91 million on the back of a surge in international travel as borders reopened.

AAX, in reviewing its latest performance, wrote in its results filing that the 2Q earnings came in below expectation due to higher-than-expected expenses.

Maybank IB noted that the airline incurred a core net loss of RM33.8 million for 2QFY2023, an improvement against the core net loss of RM653.8 million it recorded in 2QFY2022 that was then weighed down by a hefty RM569 million provision for travel vouchers to passengers and travel agents.

"That said, we still expect 2H2023 to be a lot stronger on seasonally higher demand and fares, coupled with sequentially lower expenses," said Maybank IB.

"Though we concede that 2QFY2023 was disappointing, there is still upside from AAX having its PN17 classification lifted and contributions from TAAX (Thai AirAsia X)," Maybank IB added.

It said AAX expects to record a one-off share of profits of more than RM300 million from its 49%-owned TAAX once the Thai unit’s debt restructuring is completed.