In my previous articles, I analyzed Capital A’s significant liabilities in “Is Capital A’s Liability Too Big?” and discussed its growth potential in “Capital A Ready for Takeoff”. Since then, the situation has improved drastically, making Capital A even more compelling as an investment.
In early 2024, Capital A’s USD-denominated debt stood at RM2.28 billion. The Malaysian Ringgit (MYR) has strengthened by 8.19% since January 2024 (from 4.4895 to 4.1220 MYR/USD). With each 1% strengthening of the MYR, Capital A saves RM22.83 million on its debt repayments.
This 8% appreciation translates to approximately RM187.01 million in forex savings, alleviating debt burdens and improving cash flow. The company had previously faced RM436.1 million in forex losses in Q2 2024, so this reversal significantly improves the outlook.
WTI crude oil has dropped to ~$68 per barrel in Sept 2024, down from earlier peaks of over $90-$100. This decline brings a 25–30% reduction in jet fuel costs, a key component of Capital A’s operational expenses, which typically represent 20–40% of total operating costs
For Capital A, this reduction in oil prices will significantly lower operational expenses, as the company previously recorded RM210.5 million in fuel accruals in 2023. This would lead to improved margins and boost the company’s profitability moving forward.
Capital A continues to benefit from the resurgence in global air travel. In Q2 2024, its revenue hit RM4.86 billion, a 50% increase year-on-year. Passenger volumes are expected to rise further as 168 aircraft have returned to service with plans for additional expansions to meet demand.
With RM187 million in forex savings, a 25–30% reduction in fuel costs, and rising travel demand, Capital A is set for robust growth in 2024. This recovery is likely to continue, driven by favorable macroeconomic conditions and operational improvements. Given these fundamentals, it’s realistic to expect the stock to break MYR 1.00, as Capital A builds on these gains and regains investor confidence.
read more on medium: https://bit.ly/3NbZs85
Chart | Stock Name | Last | Change | Volume |
---|
2024-11-01
CAPITALA2024-11-01
CAPITALA2024-11-01
CAPITALA2024-10-28
CAPITALA2024-10-28
CAPITALA2024-10-28
CAPITALA2024-10-25
CAPITALA2024-10-25
CAPITALA2024-10-24
CAPITALA2024-10-24
CAPITALA2024-10-24
CAPITALA2024-10-24
CAPITALA2024-10-24
CAPITALA2024-10-24
CAPITALA2024-10-24
CAPITALA2024-10-24
CAPITALA2024-10-24
CAPITALA2024-10-23
CAPITALACreated by Alex_Kho | Aug 01, 2024
Is Capital A’s Liability Too Big?
Created by Alex_Kho | Jun 12, 2024
Created by Alex_Kho | Jun 10, 2024
Created by Alex_Kho | May 21, 2024
In this insightful article, we delve into the golden opportunities presented by the recent surge in gold prices, focusing on two leading Malaysian jewellery retailers, Tomei Bhd and Poh Kong Bhd.
Created by Alex_Kho | May 16, 2024
KSL Holdings Bhd, an undervalued Malaysian property stock with attractive ratios, is poised to soar with the market's anticipated 2024 recovery. Don't miss out on this hidden gem!