Maybank Investment Bank Berhad
June 1, 2025
Capital A: Upgraded to BUY as Earnings Soar on Vigorous Start to 2025
Overview and Investment Highlights
Capital A (CAPITALA MK), Asia’s leading low-cost airline group, has kicked off 2025 with robust results. Earnings surpassed expectations, primarily due to higher ancillary income, prompting Maybank Investment Bank to upgrade its call to BUY and increase its sum-of-the-parts target price (SOTP-TP) to MYR1.09—an increase of 27%. The report highlights multiple drivers for future growth, including a weaker US dollar, lower jet fuel prices, and the full return of the airline’s fleet. Capital A is also targeting to lift its PN17 classification by September 2025 and is actively exploring dual listings in Hong Kong and the US.
- Current Price: MYR0.85
- 12-month Target Price: MYR1.09 (+28%)
- Previous Target: MYR0.86
- Market Cap: MYR3.7B (USD865M)
- Issued Shares: 4,333 million
- 52-week high/low: MYR1.09 / MYR0.67
Key Financials and Forecasts
| FYE Dec (MYR m) |
FY23A |
FY24A |
FY25E |
FY26E |
FY27E |
| Revenue |
1,290 |
1,710 |
3,679 |
3,747 |
3,816 |
| EBITDAR |
(625) |
(628) |
500 |
524 |
538 |
| Core Net Profit |
(620) |
(215) |
511 |
775 |
775 |
| Core FDEPS (sen) |
(10.6) |
(2.1) |
10.1 |
14.3 |
14.0 |
| Core FDEPS Growth (%) |
nm |
nm |
nm |
41.1 |
(2.4) |
| Net Dividend Yield (%) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
| Core FD P/E (x) |
nm |
nm |
8.4 |
5.9 |
6.1 |
Robust Q1 2025 Performance
1Q25 core net profit (combined aviation and non-aviation) reached MYR116.8m, already 33% of the full-year estimate.
Non-aviation business alone delivered MYR37.7m in core net profit (23% of FY estimate).
Ancillary revenue in 1Q25 surged to MYR60 per passenger, MYR3 above expectations, resulting in a MYR30–40m earnings boost.
Outperformance was led by stronger-than-expected baggage fees.
Revised Earnings and Upward Adjustments
Maybank IBG has revised its FY25E/FY26E/FY27E core earnings estimates upward by 43%/27%/27%, reflecting sustained higher ancillary revenue per passenger.
- For every 1% weakening of the USD, pre-tax earnings rise by about USD2m (MYR8–9m).
- For every USD1/bbl decline in jet fuel, pre-tax earnings grow by USD15.6m (MYR66.4m).
- Full fleet return expected by 3Q25.
PN17 Classification Uplift and Strategic Listings
Capital A is on track to dispose of its aviation business to AirAsia X (AAX) by July 2025, aiming to eliminate negative shareholders’ equity. With continued profitability, Capital A targets to have its PN17 classification lifted by September 2025. The company is also exploring a dual listing on the Hong Kong Stock Exchange and is considering listing Brand AA on the NASDAQ.
Segmental Performance—Non-Aviation Businesses
| Business Segment |
1Q25 Revenue (MYRm) |
YoY Growth (%) |
QoQ Growth (%) |
1Q25 EBITDA (MYRm) |
YoY Growth (%) |
QoQ Growth (%) |
| Asia Digital Engineering (MRO) |
207.0 |
23.4 |
2.7 |
40.1 |
(1.5) |
29.4 |
| Teleport (Logistics) |
258.2 |
15.0 |
(26.6) |
22.7 |
329.7 |
(22.7) |
| Move (Superapp) |
127.2 |
(1.7) |
(23.4) |
16.1 |
54.5 |
(79.2) |
| Santan (F&B) |
52.3 |
40.7 |
(8.1) |
6.4 |
93.8 |
N/M |
| BigPay (Fintech) |
8.9 |
(18.8) |
0.9 |
(14.3) |
(20.7) |
18.1 |
| Brand AA (Licensing) |
60.9 |
11.2 |
(36.0) |
49.3 |
(7.6) |
207.4 |
| Others |
63.8 |
26.2 |
N/M |
(18.3) |
43.7 |
N/M |
Discontinued Operations—Aviation Business Metrics
Passengers carried in 1Q25: 16.2 million (up 4.9% YoY)
Capacity (ASK): 22,841 million (up 12.9% YoY)
Average fare: MYR241 (down 8.7% YoY)
Ancillary revenue per passenger: MYR60 (up 5.3% YoY)
Average fuel price: USD102/bbl (down 16.4% YoY)
Valuation and Recommendations
Maybank IBG’s SOTP-based valuation for Capital A now includes detailed assessments of all non-aviation businesses, with a conservative 10x FY25E PER multiple assigned to most segments, given their early growth stage. Brand AA’s value is derived from DCF at a 12.4% WACC and 2% terminal growth rate. BigPay and other loss-making units are valued at book value. Capital A will receive 2.3 billion new AAX shares for the aviation disposal, of which 1.7 billion will be distributed to Capital A shareholders.
| Business / Investment |
Valuation (MYRm) |
MYR/shr |
Methodology |
| Asia Digital Engineering |
675.3 |
0.12 |
10x FY25E PER |
| Move |
498.9 |
0.09 |
10x FY25E PER |
| Teleport |
273.1 |
0.05 |
10x FY25E PER |
| Santan |
213.2 |
0.04 |
10x FY25E PER |
| Brand AA |
1,297.3 |
0.22 |
DCF (12.4% WACC, 2% g) |
| BigPay |
(590.2) |
(0.10) |
Book Value |
| Others |
(155.2) |
(0.03) |
Book Value |
| Tune Protect Group |
28.7 |
0.00 |
Market Cap Proportion |
| AirAsia X |
4,138.3 |
0.71 |
Market Cap Proportion |
| Total Equity Value |
6,379.5 |
1.09 |
|
Peer Comparison
| Ticker |
Name |
Country |
Mkt Cap (USDm) |
Last Price |
CY25E PER |
CY26E PER |
| SIE SP Equity |
SIA Engineering |
Singapore |
2,291 |
2.64 |
19.4 |
17.6 |
| BKNG US Equity |
Booking Holdings |
US |
177,401 |
5,451.74 |
25.5 |
22.0 |
| EXPE US Equity |
Expedia |
US |
20,974 |
164.99 |
11.8 |
10.0 |
| TCOM US Equity |
Trip.com |
China |
40,360 |
61.75 |
17.3 |
15.2 |
| FDX US Equity |
FedEx |
US |
52,654 |
219.76 |
11.4 |
10.2 |
| UPS US Equity |
United Parcel Service |
US |
82,605 |
97.55 |
13.9 |
12.3 |
| SATS SP Equity |
SATS |
Singapore |
3,600 |
3.12 |
18.5 |
16.4 |
Capital A: Value Proposition and Growth Prospects
- Asia’s leading low-cost carrier—largest market share, fleet, and route network.
- Operates in Malaysia, Thailand, Indonesia, Philippines, and Cambodia.
- Lowest unit cost airline globally, with highly ambitious and cost-conscious management.
- The growing Asian middle class supports sustained demand for air travel.
- Winner of the ‘World’s Best LCC’ award for 15 consecutive years by Skytrax.
Key Financial Metrics, Swing Factors, and Sensitivities
Return to profitability forecast for FY25, with stronger growth in FY26 as more aircraft return to service.
Earnings are highly sensitive to fuel prices and USD/MYR fluctuations:
Every USD1/bbl change in fuel price impacts earnings by MYR40–50m.
60–70% of operating costs are USD-denominated.
Core net profit/(loss) trajectory:
FY22A: (2,692.8m), FY23A: (620.5m), FY24A: (214.9m), FY25E: 511.2m, FY26E: 774.8m, FY27E: 774.8m
Risks and Opportunities
Upside:
- Policy tailwinds such as visa relaxations and tourism-friendly events boosting passenger growth.
- Reduced competition as rivals scale back post-COVID-19.
- Potential for further financial assistance to bridge liquidity gaps.
Downside:
- External shocks: epidemics, aviation incidents, or black swan events impacting travel demand.
- Volatile fuel prices and currency risks.
Conclusion
Capital A’s strong start to 2025, driven by higher ancillary income and improving operating conditions, positions it for significant upside. With positive steps toward resolving its PN17 status, multiple listing initiatives, and robust segmental growth, Capital A is now rated a BUY with a 12-month target price of MYR1.09. Investors should closely monitor execution risks, fuel price trends, and forex fluctuations, but the turnaround story is compelling.
Other Publicly Listed Companies Referenced
AirAsia X (AAX MK):
BUY rating
Current Price: MYR1.68
Target Price: MYR2.69
Tune Protect (TIH MK):
Current Price: MYR0.28
Not Rated
Contact Information
For further details, contact the lead analyst:
Yin Shao Yang
samuel.y@maybank-ib.com
Tel: (603) 2297 8916
Maybank Investment Bank Berhad, June 1, 2025
