KUALA LUMPUR (Oct 6): AirAsia Group Bhd rose three sen or 2.68% to RM1.15 on Wednesday morning after securing the approval of Danajamin Nasional Bhd for a club facility of up to RM500 million under the Danajamin Prihatin Guarantee Scheme.
At RM1.15, the counter was valued at RM4.4 billion. It saw 9.78 million shares traded as of the time of writing.
Over the last one year, the stock had risen nearly 80% to current levels from the closing price of 64 sen on Oct 6, 2020.
PublicInvest Research said in a note on Wednesday the approval gives the group some breathing space and leeway in ramping up its operations when interstate and international borders reopen in the near future.
To note, Malaysia is looking at allowing interstate domestic travel and international travel when 90% of its adult population is fully vaccinated. That vaccination rate stood at 88% as of Oct 4, 2021, according to the Ministry of Health (MoH).
According to the research firm, the RM500 million club facility together with other funding and monetisation exercises will have raised RM2.1 billion, within AirAsia’s guidance of RM2 billion to RM2.5 billion range in new capital.
It said the approval from the Malaysian government is a welcome boost to AirAsia’s overall fundraising strategy to address its cash flow requirements.
Along with the group’s renounceable rights issue of up to RM1 billion, which is expected to be completed in December 2021, the group will have sufficient liquidity and working capital to ramp up its operations, the research house added.
Nonetheless, it understands that the group would continue to explore other available funding options and/or corporate exercises to ensure sufficient liquidity and further strengthen its capital structure.
“We make no changes to our forecasts and maintain our 'neutral' call on AirAsia with an unchanged target price of 0.86 sen for now,” it said, adding that the group’s share price moved up recently on optimism surrounding resumption of travel.
AirAsia said in a statement on Tuesday the guarantee from the government of Malaysia via Danajamin/Syarikat Jaminan Pembiayaan Perniagaan (SJPP) is a strong signal of support for AirAsia as the group gears up to ensure it is in a robust position to once again serve the nation and the communities it operates in, playing a key role in rebuilding the economy as the country emerges from the Covid-19 pandemic.
“The financing under the club facility is earmarked for working capital purposes, which will support staff costs and key operating expenses such as aircraft maintenance,” it said.