That is a snap shot of AirAsia's earnings!!!
Massive losses again!
Guess what AirAsia did DELIVER its strong REVENUE as promised but as you can see, strong revenue does not equate to strong net profit. ( see What Lah! Didn't AirAsia Said No More Oil Bets? - in it I posted an article from Business Times stating "Strong bookings to fuel AirAsia's revenue"
- I had a chuckle. Record revenue?
Since when did revenue ever counted for anything in the investing world?
Strong revenue WILL NOT seduce any investors to invest in a stock!
Strong net profits, yes!
Anyway I was most interested in what's inside AirAsia balance sheet and compare to what I was looking at in the previous quarter in November 2008 as blogged in AirAsia Posted Massive Losses!
Cash balances now only totals 593.871 million!!!!!
3 months ago AirAsia had 774 million.
And as stated in AirAsia Posted Massive Losses! , AirAsia had some 1.084 billion in its previous quarterly earnings reported in August 2008! ( see Quarterly rpt on consolidated results for the financial period ended 30/6/2008 )
Would you call this as burning up cash at an alarming rate?
Would you?
And the debts?
Total debts at 6.690 Billion!
Blogged on Tuesday Would You Define AirAsia Debt As A Bubble? AirAsia just got new debts of 2.5 billion! (total future debts should be at least 9.19 Billion!)
So what do we have here?
Massive capital commitment + shrinking cash balances + ballooning debts!!!!!
And not forgetting massive losses too!
Simple mind boggling thing is that with total fiscal year losses at 471 million, how and when AirAsia is ever going to pay back its 9.19 billion in borrowings????????
And what's even more mind boggling is the recent events like AirAsia Ponders Manchester United Shirt Deal or More Capital Borrowing For AirAsia to fund Labu LCCT project???? or how about the AirAsia Buyout talks?
Truly unbelievable!
Actually... I think revenue is relevant to stock analysis.. it shows the growth potential of a company. I personally wouldn't want to invest in a company with shrinking revenue, which could be telling that the company is losing market share? If you look at airasia's operating data or presentation, they did record some encouraging passenger growth. Of course, higher revenue should translate to higher net profit, i do agree that net profit is more important. But in AirAsia's case, the huge loss was very much due to the "exceptional item" of >rm400million. If you exclude this and the deferred tax, core net profit is still quite decent. However, on whether to treat the lumpy RM426 million as "exceptional" or "one-off" is disputable. Who knows whether there will be another RM400million exceptional items next year?
ReplyDeleteAll in, my view is that AirAsia is doing some sort of bloodbath this year.. and charging all the shit to FY08 since it's already a bad year (stock mkt collapse, record high jetfuel cost). So in FY09, they are basically unhedged and could take advantage of the lower fuel cost, as well as the lower finance cost (part of the RM426 million was due to unwinding of interest rate swap) I do believe that they can deliver some nice profit in FY09! BUT BUT BUT... i also agreed with you on the issue of high gearing.. hehe :)