No introduction required, I will go straight to my 5 points as per below.
1. Early Stage of Re Rating Those who have experienced the 2015 furniture stocks bull run will agree with me that we are still at early stage of re rating for Air Asia.
The furniture industry re rating began in early 2015 and lasted for one full year. Many stocks in that sector went up by few hundred percents. If not because of recent strengthening of Ringgit, the process would likely have continued.
Good companies with strong earnings visibility are not easy to come by. If you bump into one, cherish the opportunity and hold on to the stock. Don't kill the goose that lay the golden eggs, so soon.
LET THE PROFIT RUN.
2. Still Undervalued Air Asia is expected to do well this year. A survey of analyst reports shows that the group is in position to generate EPS of closed to 30 sen.
At current price of RM2.10, the stock is still cheap.
SEEK GUIDANCE FROM FUNDAMENTALS, DON'T LET EMOTION DICTATES YOUR INVESTMENT DECISIONS.
3. Private Placement Will Result In Strong Alignment of Management and Shareholders' Interest Certain investors are excited by the placement to Tony Fernandes and gang ("TF Incorporated"), but certain investors are not happy. The difference in opinion mostly centred on "allocation of value". But there is no dispute that with so much at stake, TF Incorporated are now motivated to make it work.
MANAGEMENT CUM MAJOR SHAREHOLDERS NOW HAVE STRONG INCENTIVE TO CREATE VALUE. THIS WILL SPILL OVER TO BENEFIT ALL OTHER INVESTORS.
4. Short Term Catalyst I have never heard of a tycoon that doesn't like leverage. TF Incorporated will almost certainly make use of margin facility to finance their placement subscription.
When come to margin financing, nothing convinces bankers more than strong share price - "Look, it is trading at RM2.50 now, and you are lending me money to buy at RM1.80. Why worry ?"
In a recent interview with The Star, Tony Fernandes mentioned that the Company targets to convene EGM for the placement on 9 May 2016. My guess is that the placement will be completed immediately after EGM, so as to wrap up the entire exercise before release of strong financial results by end May 2016.
TONY INCORPORATED HAS INCENTIVE TO KEEP SHARE PRICE BUOYANT IN THE IMMEDIATE TERM SO AS TO FACILITATE SMOOTH DRAW DOWN OF MARGIN FINANCING FACILITY BY SECOND HALF OF MAY 2016.
5. Act Contrarian To Aunty Z There is an emerging consensus in i3 that if you act contrarian to Aunty Z, you are likely to do well.
SINCE AUNTY Z IS UNCOMFORTABLE WITH AIR ASIA, WE SHOULD OVERWEIGH THE STOCK.
Disclaimer: I AM NOT ASKING YOU TO BUY OR SELL. I wrote this as a sharing. AIRASIA is a very liquid stock and foreign investors like to play this stock too. Meaning to say my blog will not have impact on AIRASIA price at all. So for whatever reason AIRASIA price drop/increase, I assume no responsibility to answer to you if you somehow act (buy/sell) after reading this blog. As much as I try to estimate the share price movement, I have limited resources as I am not the management of AIRASIA and I am not an expert on aviation. So treat this as informational piece. I AM NOT ASKING YOU TO BUY OR SELL.
AIRASIA (5099) - (Icon) 5 Reasons To Be Greedy When Other Is Fearful of Air Asia
http://klse.i3investor.com/blogs/icon8888/94773.jsp
