Maybank Investment Bank Berhad
Date of Report: August 27, 2025
AirAsia X Bhd: Cheap Valuation Amid 2Q25 Weakness—Is a Recovery on the Horizon?

Executive Summary: AirAsia X’s 2Q25 Disappointment Offers Value Opportunity

AirAsia X Bhd (AAX MK), Malaysia’s leading medium- to long-haul low-cost carrier, has released its 2Q25 and 6M25 results. The numbers fell short of expectations due to weaker unit passenger revenue, notably impacted by extraordinary events in Japan and ongoing trade dynamics in China. Despite the earnings miss, the stock remains undervalued, trading at just 4x FY25E PER, well below the global low-cost carrier average of 9x. Maybank Investment Bank maintains a BUY rating but revises the target price to MYR2.00, down from MYR2.69.

Results Overview: 2Q25 and 6M25 Performance Analysis

• 2Q25 core net loss: MYR1.7m
• 6M25 core net profit: MYR44.1m (22% of FY estimate)
• 6M25 revenue: MYR1.6b (42% of FY estimate)
• 6M25 EBITDA: MYR195.3m (39% of FY estimate)

The main drag was lower-than-expected unit passenger revenue (average fare plus ancillary income), which came in at MYR750, MYR31 below expectations. The 2Q25 average fare of MYR405 marked a post-COVID low.

Key Causes: External Factors Impacting Revenue

• China Routes: Impacted by ongoing trade war, suppressing fares.
• Japan Routes: A unique factor was the influence of “The Future I Saw” prophecy predicting a disaster in Japan in July 2025, leading to a sharp drop in load factors to 70% from 90%. This compelled AAX to reduce fares to stimulate demand, affecting profitability in one of its most lucrative markets.
• Korea and Australia: Alongside Japan, these remain among the company’s most profitable routes.

Revised Earnings Outlook and Forward Strategy

Maybank Investment Bank has cut its core net profit estimates for FY25E/26E/27E by 26%/23%/23% respectively to reflect the lower unit passenger revenue of MYR750. Despite this, AAX remains optimistic, expecting fares to Japan to recover post-July and planning new routes to Tashkent, Uzbekistan and Istanbul, Turkiye in 4Q25. Istanbul is anticipated to be a high-demand destination.

Strategic Developments and Corporate Actions

• AAX is in the process of acquiring Capital A Berhad’s five airlines, pending consent from two aircraft lessors and regulatory clearance in Thailand.
• The company has applied for an extension to complete its proposed issuance of free warrants, private placement, and airline acquisitions.
• Maintenance expenses are expected to decrease in the second half of FY25, as fewer aircraft undergo heavy checks compared to 1H25 (MYR346.3m).

Financial Highlights and Metrics

• Share price (Aug 2025): MYR1.47
• 12-month target price: MYR2.00 (+36%)
• Market capitalization: MYR657.2m (USD156m)
• Major shareholders: Tune Group Sdn. Bhd. (16.5%), Capital A Berhad (12.8%), Kamarudin bin Meranun (8.3%)
• 52-week high/low: MYR2.12/1.27
• Free float: 53.2%
• Issued shares: 447m

Operational Metrics: Passenger and Capacity Trends

• Passengers carried (6M25): 2.01 million (+9.3% YoY)
• Capacity (6M25): 2.41 million (+8.8% YoY)
• Load factor: 83% (stable YoY)
• Average fare (6M25): MYR483 (-13.5% YoY)
• Average ancillary income (6M25): MYR268 (+7.3% YoY)
• Unit passenger revenue (6M25): MYR750 (-7.1% YoY)
• RASK (6M25): 14.89 sen (-10.8% YoY)
• CASK (6M25): 13.10 sen (-5.9% YoY)
• Fuel consumed (6M25): 1.63m bbl (+7.9% YoY)
• Average fuel price: USD93/bbl (-12.3% YoY)

Balance Sheet and Liquidity

• Net cash position at end-2Q25: MYR51.4m (if excluding finance lease liabilities)
• Cash & Short-Term Investments (FY25E): MYR372.8m
• Net gearing (FY25E): 170.4%
• Total assets (FY25E): MYR3,232.8m
• Total liabilities (FY25E): MYR2,734.9m
• Shareholders’ equity (FY25E): MYR497.9m

Value Proposition: Why Investors Should Watch AirAsia X

• One of the world’s lowest cost airlines, with ticket prices >30% below full-service carriers.
• Operates from Kuala Lumpur and Bangkok, leveraging strong demand in Asia-Pacific.
• Voted 9th best long-haul low-cost airline in the world (2024, SkyTrax).
• Growing Asian middle class is a structural growth driver for air travel demand.
• Financial metrics are highly sensitive to fuel price movements: a USD1/bbl change affects earnings by about MYR15m.

Major Risks and Opportunities

Upside Factors:

• Policy changes (e.g., visa relaxations and tourist-friendly events) could boost passenger traffic.
• Reduced competition post-COVID allows for higher fares and market share gains.
• Financial support or liquidity infusions could bridge temporary cash gaps.

Downside Factors:

• Exogenous events (disease outbreaks, air tragedies, or other black swan incidents).
• Fuel price volatility—uncertainty in hedging at favorable rates.
• Weakness in the Malaysian Ringgit—around 80% of operating costs are USD-denominated.

Company Outlook: FY25E–FY27E Targets and Analyst Perspective

• AAX expects recovery in fares to Japan and new routes to Uzbekistan and Turkiye to lift performance in 2H25.
• Maintenance costs to decrease in 2H25 as fewer aircraft undergo major checks.
• Finalization of acquisitions and corporate actions could reshape the group’s structure and funding.

Historical Share Price and Analyst Ratings

Conclusion: Solid Fundamentals, Attractive Valuation, but Near-Term Recovery Needed

AirAsia X Bhd faces near-term earnings pressure, primarily due to unexpected external factors and lower fares in key markets. However, its cost structure, recovery strategy, and new routes keep the long-term story compelling. The current share price offers attractive upside, with a 12-month target of MYR2.00 (+36%). Investors should watch for solid 2H25 earnings to unlock further value, while monitoring risks related to fuel prices and exogenous events.

Disclaimer and Analyst Certification

This article is based solely on the content provided from the broker’s research report and does not constitute investment advice. Investors should always conduct their own analysis and consult professional advisers before making any investment decisions. Analyst certifications and legal disclosures are available in the original report.