Does everyone notice something? if a company has bad results, the quarterly report is always late. If the results are good, the report is always early

Shaky ground?

Plenty la...

Firstly, you know, I know AirAsia's built on EXTREME funding.

Can suggest a business sustain long term?

You tell me....

Look at it now..

I don't use fancy calculations when I look at financials.
You know me la...
I am just a business trader only.

First thing I look at in the Balance Sheet: Deposits, bank and cash balances

Previous quarter: ie the Aug profit report, Deposits, bank and cash balances stood at 1.367 Billion (huhu.... AirAsia cash rich.... no die one... ) (some more since it's in a depreciation heavy industry... depreciation masks away a lot of cash. )

This quarter report, ie the one report the other day. Deposits, bank and cash balances now stands at 1.084 Billion.

What does this simple comparison tell me? The Deposits, bank and cash balances is SHRINKING fast!!!!!

Agree?

Next of course, I look at DEBTS.

Page 26 of the pdf file you attached.

Total debts now is 11.791 Billion vs 3 months ago 11.487 Billion.

Clearly DEBTS is increasing!!

I took a step further. I opened last year quarterly report ending Sep 2013.

How much debts did AirAsia carried at end June 2013?
Total debts at end June 2013 was at 8.812 Billion!

What does this simple comparison tell me? Debts is EXPLODING at an alarming rate !!!!!!

Of course, reasoning is so simple.

Business is built on funding.
And if we gauge on the hedging/gambling episode of past few years.... we can clearly guess that Tony is a bloody risk taker.
He hits for the home run every time he gets on to the plate.
Not saying this bad...
but sometimes it is even good...
that we have an aggressive leader...
a go getter....
but as you know there is a risk...

and the risk here is obviously.... AirAsia was way too aggressive.
The booking of new airplanes was overly aggressive...
That order represents a commitment to buy.......
of course some leeway like postponing of delivery dates can be expected and allowed (as seen in recent years) but no matter what, AirAsia will one day, in the future, take delivery of the airplanes it has booked.....
and since this is all done tru EXTREME funding.....
AirAsia debts will always increase!!!!

So the shaky ground clearly is.....
CASH is flowing out, coupled with exploding debts.

How long can such a business model last?

Next....
The few lines above (and the reason also why I highlighted that article for you) .... is loans to associate company.
in the Balance sheet, couple of lines above the Deposit figures, we have "Amount due from associates"
The "Amount due from associates" now stands at 1.6 Billion!!!!
previous year the amount was ONLY 738 million!!!!

Add this to the earlier issue....
my conclusion is I see a company which is ALREADY financially weak, lending MORE money to its associate companies......
This is a --->

I think I stop here laaaa....
no need to compare much further....

this is why I say AirAsia is built on shaky ground..... a business model which clearly does not look sustainable for me.

Ah Tan,

Took some time reading more of AAX profit report. (first time la. LOL! )

Firs page, first few lines....
I went....

Revenue this quarter 698,764 vs 601,491 same quarter a year ago.

Business is good compared to a year ago.

Then I see the staff costs.

I was very curious about since the hoo-ha over staff payment.

Staff costs this quarter: 81,445 vs 57,755 same quarter a year ago.

So clearly, staff costs increased drastically, much more than their sales revenue increase.

That already....... a bad indicator......

If not mistaken they open a few new route and that is why there is increase in staff cost

Problem is MAS and other airline started the price war and AAX has no choice but to reduce its price to compete


Ah Boon, look at their trade payables
Dec 2013 : RM203mil
Sept 2014 : RM416mil

Other payables
Dec 2013 : RM143mil
Sept 2014 : RM281mil


Revolving credits (current) : RM288mil
Cash available (Note 21) : RM61mil

Trade payables and other payables doubled, cash depleting and Company has to pay RM288mil within 12 months

I remember this is not the first time Air Asia group delaying payment to MAHB
Did MAHB management rant to the media like he done in the past?

Tell me how are they going to turnaround without a cash call?
Even The Stars today reported they have to raise cash to maintain operation, is just a matter of time the shareholders will be squeeze like MAS case this round

Yup.
AAX is indeed in deep shit.
The problem is when AAX is in deep shit, AirAsia will be effected, since it is the majority shareholder ( right? )
And when AAX makes a cash call, AirAsia and Tune Group will have to fork out money!

AAX market cap is around 1.5billion
AirAsia market cap is around 6.7 billion.

Two monsters companies....
which blatantly used excessive debts to grow the company....................

* and just for the curious... current MAS market cap is around 4.4 billion *

Not bad eh?



This post has been edited by Boon3: Nov 24 2014, 03:51 PM

Ada tipsy? Today masuk or tomorrow masuk?

Btw, anyone study TURBO? FA POV very good right?

Eduspec engine is warming up liao!!

Hi Boon.. how is the chart looking now? there is a big volume buying last friday. To answer your question, I would wait for a follow thru buying just to be sure before jumping the gun but I can't determine what's a good follow thru buying.

Yea you're right day traders could make up the volume.. but how do we know if it's day trader or buy and hold type?

You can never be 100℅ certain one.
Sometimes we just make out best guesstimates.

For this instance, when there is no follow thru selling come T+ trading days, thwn we can assume some strong hands buyers probably accounted the bulk of the buying.


This post has been edited by Boon3: Nov 25 2014, 06:08 AM

There was some talk of TGUAN earlier but it seems to have released a rather bad quarterly report and its price duly dropped. Thoughts for now?

The poor results were in tandem with our plastic companies such as SLP and BP Plastics.
Overall, I am surprised.
The thinking process does make sense.
As oil prices slump, resin materials should move lower, hence cheaper material costs for these companies......

Mui have been suspended since 21/11
Can any1 know wat KKP is cooking?

From the financial report, it seems like the company not really able to pass their rising cost to their product that well due stiff competition in the industry.

There are few sign of red flag like increase receivable and negative operating cash flow during the period ( bad sign ).

From the financial notes, they blame it on China & Sabah operation, and they will try to improve the margin ?

5th and 6th line for its PVC food wrap division will be commence by this end of 2014, another room of increasing revenue......

Despite all of these issue, all the IB still give very high TP for this stock mostly near RM 3.00

So final call?

Suspended until tomorrow right?

Till today
Should resume tomorrow

And their PBT margin is only a meagre 4%

Earnings very vulnerable to rising costs

so your final call leh pinky?

I thought u have this stock?

Very disappointed with the latest financials. Dumped at a small loss.

Seems that there is little real gem nowadays. Consolidating my portfolio with only real quality stocks that demonstrate growth and decent margins.

This post has been edited by Pink Spider: Nov 25 2014, 11:50 AM