RojakInvestor

thx for the formula. cheers for the effort

2017-06-05 17:52

hopetobecorrect

good job

2017-06-05 18:05

eyewitness

Investors go by core earnings, bro, not forex gains or losses.
In core earnings, AAX's sensitive mainly to jet fuel costs. See its Q1/3/17 results which tanked.

2017-06-05 19:13

radzi

Eyewitness, from a certain perspective you are correct. From my perspective, the first and easiest step is to show how currency affect forex gain/loss. If you care, to look out, AAX result in 2014/and first three quarters of 2015 and Q42016 were tanked down by forex losses.

My next analysis would be how movement of US Dollar will affect leasing cost, maintenance cost and fuel cost. Remember fuel cost constitute 30% of total AAX cost. Any favourable MYR appreciation will reduce fuel cost and increase core earning. I just hope I got the data and some brainy spark to get a good model.

2017-06-05 19:23

lspee

Thanks radzi. How is the trend for airasia? Similar?

2017-06-05 19:35

Equityengineer

I would like to see it from Cubic equation. The bigger the appreciation (x-axis),loss/gain would go loss/gain exponential. The larger fluctuations gain/loss of currency range for that period. it will move exponentially.

2017-06-05 20:10

radzi

Equityengineer; I could do cubic, exponential, Weibull, logarithmic, and other non-linear equation.. etc. But theory does not support that relationship and data does not lie. So, I have to reject your request.

2017-06-05 20:29

MrPauper

I do agree that if rm/usd is able to appreciate to 4.20 then things will start to look better. And if able to move further up to 4.00 that would be fantastic given that everything else remain constant

2017-06-05 20:43

radzi

Mr.Pauper, u r right. Currently RM /USD is 4.26 and looking at the trend, it is having appreciation trend, and may go to 4.20 soon, whether it could be captured within Q2 reporting time is not yet known.

2017-06-06 05:01

elbrutus

if Q2 2017 .cant catch it in time...then Q3 must hamtam kaw kaw

2017-06-06 07:43

radzi

I have more extra bullet for Q3 .. will hentam kaw kawa... hahahahaha.

2017-06-06 08:44

stockmanmy

I think this is a very well done article and methodology.

My regret is I did not look carefully at 2016 quarterly results. If I did, I would realise Q4 results is very much within expectations.


market cap at 50 sen would be $ 2 billion. PE 10 requires a core profit of $ 200 million, PE 8 requires a core profit of $ 250 million...a tall order.

2017-06-06 09:06

radzi

stockmanmy : I share your concern and I will go through it and address it later. My first wish 9 months ago , OPEC does not apply any cartel but they did, and AAX (Kama and Benjamin) adopted increasing market share strategy which does not bode well for profitability. They want to become market leader in the expense of profit. If I am the CEO , I would do differently. Obviously I will meet Peter Bellew and Chandran Rama Murthy to discuss the industry future.

Anyway, that is the past. What about the future ? I will do some more analysis which include time series to predict future profitability. I know two things for sure. Malaysia ringgit will improve considerably in the future. OPEC cartel has become lethargic, oil price even drop more after Qatar was dissociated by Saudi. So, looking forward, there is light at the end of the tunnel. Whether the tunnel is long or shorter, it is the market that decides. I shall analyse if profit USD 250 million or more is achievable or not. My intuition says - it is achievable. That is why I have bought and will continue buying.

2017-06-06 09:19