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MarketScreener Homepage  >  Equities  >  BURSA MALAYSIA  >  AirAsia Group    AIRASIA   MYL5099OO006

AIRASIA GROUP

(AIRASIA)
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AirAsia shares in biggest daily fall as auditor flags 'going concern' doubts

07/08/2020 | 04:34am EST
FILE PHOTO: AirAsia planes are seen parked at Kuala Lumpur International Airport 2, during the movement control order due to the outbreak of the coronavirus disease (COVID-19), in Sepang

By A. Ananthalakshmi and Anshuman Daga

Shares in Malaysia's AirAsia Group tumbled more than 17% on Wednesday in their biggest daily fall after the auditor cast doubt on the budget carrier's ability to continue as a going concern due to the coronavirus travel slump.

Auditors EY issued an audit opinion stating the airline's 2019 earnings were prepared on a going concern basis, which is dependent upon a recovery from the COVID-19 pandemic and the success of fundraising efforts.

AirAsia said in response that Malaysia's stock exchange had granted it 12 months relief from being classified as a financially distressed firm, a classification that would require it to submit a business improvement plan.

Other firms hit by the pandemic have received similar relief.

"EY is waving a red flag, which signals to investors and creditors serious risks to AirAsia if the current crisis doesn't end soon or if the airline doesn't get a cash injection," said Shukor Yusof, head of aviation consultancy Endau Analytics.

Shares in AirAsia, one of Asia's biggest budget carriers, have plunged 58% this year, giving it a market value of about $550 million. Shares in its long-haul arm, AirAsia X, fell 5% on Wednesday.

Like other airlines, AirAsia has been hit hard as the coronavirus hammers travel demand. It posted a first-quarter loss of 803 million ringgit ($188 million), its biggest loss for the quarter since its 2004 listing.

AirAsia said last month it was evaluating capital-raising proposals to strengthen its equity base.

AirAsia management has given guidance that an equity raising via a placement or rights issue looks imminent, Affin Hwang Capital analyst Isaac Chow wrote in a report on Tuesday.

AirAsia did not comment on its fundraising efforts.

The airline's liabilities exceeded its assets by 1.84 billion ringgit at the end of 2019, Ernst & Young said in its unqualified opinion. An unqualified opinion indicates the auditor believes a company has prepared its statements fairly.

AirAsia said on Monday joint ventures and collaborations were being considered that might result in additional third-party investments in specific segments of its business.

It has also sought payment deferrals from suppliers and lenders and halted all deliveries of Airbus SE jets this year as it seeks to cut costs.

"There's a question mark over the viability of the low cost carrier business model post-COVID19," said Yusof, adding AirAsia had little choice but to shrink its fleet size and slash staff and saying its efforts to expand in India and Japan had not been successful.

Elsewhere in the region, Thai Airways International and Virgin Australia Holdings Ltd have entered bankruptcy protection due to their inability to pay creditors.

($1 = 4.2760 ringgit)

(Reporting by A. Ananthalakshmi in Kuala Lumpur and Anshuman Daga in Singapore; Additional reporting by Jamie Freed in Sydney and Mei Mei Chu in Kuala Lumpur; Editing by Edwina Gibbs and Edmund Blair)


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
AIRASIA GROUP 0.00% 0.745 End-of-day quote.-15.82%
AIRASIA X -7.14% 0.065 End-of-day quote.-13.33%
AIRBUS SE 0.08% 91.38 Real-time Quote.1.57%
SET 0.83% 1522.59 Real-time Quote.4.19%
THAI AIRWAYS INTERNATIONAL -1.09% 3.62 End-of-day quote.14.56%
VIRGIN AUSTRALIA HOLDINGS LIMITED 6.17% 0.086 End-of-day quote.0.00%
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Financials
Sales 2020 3 464 M 856 M 856 M
Net income 2020 -3 238 M -800 M -800 M
Net Debt 2020 11 520 M 2 846 M 2 846 M
P/E ratio 2020 -0,77x
Yield 2020 -
Capitalization 2 490 M 615 M 615 M
EV / Sales 2020 4,04x
EV / Sales 2021 1,71x
Nbr of Employees 21 059
Free-Float 59,1%
Chart AIRASIA GROUP
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Technical analysis trends AIRASIA GROUP
Short TermMid-TermLong Term
TrendsBearishBullishNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus SELL
Number of Analysts 19
Average target price 0,50 MYR
Last Close Price 0,75 MYR
Spread / Highest target 40,9%
Spread / Average Target -33,5%
Spread / Lowest Target -85,2%
EPS Revisions
Managers and Directors
NameTitle
Tharumalingam Kanagalingam Chief Executive Officer
Adrian Jenkins Chief Operating Officer
Pattra Boosarawongse Group Chief Financial Officer
Kin Choy Lau Group Head-Information & Communication Technology
Nadzri Hashim Head-Engineering
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