If the RM 100m per quarter revenue number is true, this is a business worth saving as it is not easy for a confectionary business to reach this size. There is much value in the business processes, relationships and IP.

Probable top management fraud, auditor eyes closed and audit committee members sleeping. This will be an interesting case study considering the private placements only a few months ago.

However the impairment of receivables may have been too aggressive if quarterly revenue is RM100m as the industry operates on credit sales; unless there is a problem with the revenue number as well.

ChefSaham,

Under MFRS 16 long term lease (rental) is not recorded as lease but recorded as depreciation and finance costs plus some etc. Look at note 2 of the Q3. Therefore, the concept of EBITDA needs to be modified as ADJ EBITDA.

Under Page 6, CASH FLOW FROM FINANCING ACTIVITIES, you can find repayment of Lease Liabilities of RM 550m for the 9 months to Sep 2019.

This means that EBITDA of RM 605m becomes ADJ EBITDA of RM 55m only.

Q1 total comprehensive profit was RM 198m
Q2 total comprehensive loss was RM 184m
Q3 total comprehensive loss was RM 328m.

Shareholders equity @ 30 Sept 2019 was RM 213m .... rights issue or share placement eminent, otherwise another 1-2 weak quarters will push shareholders equity to be negative.

Waiting to collect shares at <RM 0.10

Track “Sales in Advance” (Current Liabilities - Statement of Financial Position) over the past few years. Trend shows downward slope. Not a good sign for the business model.

Current assets reduced from RM 1.55b to RM 1.14b while current liabilities increased from RM 2.17b to RM 2.63b

High chance for another round of Rights Issue.

ChefSaham,

Please read AAX's condensed consolidated income statement which shows EBITDA with care. AAX adopted MFRS 16 in 2019 which requires recording of long term leases into balance sheet but they did not reclassify 2018 numbers for like-to-like comparison on the face of the financials (the impact was instead disclosed in the notes). You would notice that its Aircraft Operating Lease expenses in 2019Q2 was zero compared to 2018Q2 at RM214,992,000.

Note 2 showed Aircraft Operation Lease expenses of RM249,636,000. Once you do the reclassification to move it back on top for like-to-like comparison, the EBITDA deteriorated from negative RM60,489,000 in 2018Q2 to negative RM128,817,000 in 2019Q2.

BTW, with MFRS 16, the Aircraft Operating Lease is now treated as Financing Activities. Therefore, once this is reclassified, the statement

.... "The Company reported a net cash generated from operating activities of RM268.8 million, a significant increase year-on-year (“YoY) from the previous year’s RM23.5 million."

.... becomes RM268.8m - RM249.6m = RM19.2m which means it is generating less cash compared to the year before.

AAX will probably need another rights issue soon.

The results are disappointing, way below expectations. Expect market to sell down tomorrow.

- Sales in Advance increased from RM 938m to RM 1.12b, i.e. 19.6% means absolute market size is still increasing.
- Avg Fuel Cost increased 33% but Avg Fare per passenger down 6%, means the 21% capacity increase was too much and the market cannot absorb the excessive expansion in capacity.
- User and other related charged increase from RM 306m to RM 475m, i.e. 55.2% is way beyond the 20% increase in the number of flights. Also shown in Cost/ASK ex-fuel which increased from 8.26 sen to 10.35 sen (25%). I have to salute CIMB for getting this right before everybody else.


AA needs to slow down its capacity expansion, otherwise it will have to sacrifice margins to get seat load factor up. This will be critical to assess their financials in 2019.

Anybody know how many aircraft AA taking delivery in 2019? They have 141 aircraft as at end-2018.

AAX

Fuel hedging
As at 30 Sept 2018, outstanding number of barrels of Brent and fuel derivative contracts was 251,232 barrels (2017: 1,265,510 barrels).

Fuel hedging
As at 31 December 2018, outstanding number of barrels of Brent and fuel derivative contracts was 4,857,328 barrels (2017: 364,862 barrels).

Consumption in Q4 was 1.3 million barrels. This meant AAX hedged approx 11 months of its fuel requirements for 2019 ..... I suspect AA should have similar pattern which will be good as it may mean that it has locked down cheap oil prices.

The reports are probably correct.

AAX's Property plant and equipment dropped from 1.65b in Q3 to 0.62b in Q4. Assets were shifted to Assets held for Sales (Current Assets). That likely meant:

1) there will be sale and lease back of assets to raise cash.
2) the higher tax is due to earlier capital allowance recognised being reversed when assets are shifted from Non-Current Assets to Assets Held for Sale.

This is focus on short term cash flow vs long term financials ...... I suspect there will be rights issue in the near future and AA will have to set aside cash to subscribe.

AAX's result is bad:

1) Average fuel price increased 29%
2) Average passenger fare reduced 6%
3) Average ancillary revenue per passenger reduced 3%
4) Load factor reduced 5%

Taken together, it means AAX was not able to pass on fuel cost increases to customers as demand sagged. This is also reflected in lower Sales in Advance of 676m compared to prior year of 715m.

AAX's passengers are typically leisure travellers and are affected by disposable income and confidence level with the economy whereas AA's passengers are business / routine travellers, thus, demand is more inelastic. But the risks is AAX will require rights issue to recapitalise its weak balance sheet which will affect AA's dividend.

Most people in this forum comment about buy shares / sell shares.

This newinvestor17 keeps commenting about other people rather than comment about the counter.

And we now have comenowmoney do a tag team with N17 to replace saham4u. Looks like switched account alright.