The Super+ package. Leveraging its extensive offerings in its Super App, CAPITALA launched Super+ subscription package, which is similar to the one introduced in March 2022. With an annual subscription fee of RM888 or RM2388 (the more expensive package includes more destinations), users are given access to unlimited flights to the specified countries. Both options include an unlimited 10% discount on AirAsia ride and an unlimited 5% discount on all hotels on the AirAsia Super App. Unlike the previous package, the Super + is also available to everyone across the globe, including those in US, EU and all other regions. Overall, we are upbeat on CAPITALA's ongoing efforts to integrate all of their products (airline, travel products and services, and AirAsia ride), forming a strong and comprehensive ecosystem that will strengthen its Super App's competitiveness by increasing user stickiness.

Digital ventures and air travel gaining traction. In fact, CAPITALA's digital ventures are gaining traction, underpinned by a 24% QoQ jump in Super App's EBITDA to RM15.8m in 3QFY22, owing to an increase in transaction volume and value. Furthermore, profitable ADE is securing new hangars to increase its capacity to 7 lines by end of the year, and it is aiming to expand its customer base to non-AirAsia group (currently 1% of revenue). Teleport went into black in 3QFY22, and this is expected to grow further alongside with the group’s growing network capacity. Air travel demand, on the other hand, continues to recover as more countries reopen borders and relax travel requirements. Management guided on operating 140 aircrafts by end FY22 (from 103 in 3QFY22) and targets full fleet operation (211 aircrafts) by 2QFY23.

Restructuring plan. With the focal point remains on its PN17 regularization plan (deadline by early Jan), we gather that the plan will be submitted to Bursa by early 2023 (submitted extension of time application). The overall plan is for CAPITALA to dividend-in-specie Aviation Group and then be acquired by AAX (to be renamed Aviation Group), resolving the negative shareholder equity issue (likely due to goodwill).

Pending double bottom breakout. Technically, CAPITALA is pending for a double bottom breakout. A successful breakout above the RM0.60 neckline will indicate a downtrend reversal and spur the price toward RM 0.65-0.75-0.77levels. Cut loss at RM0.52.

Source: Hong Leong Investment Bank Research - 13 Dec 2022