No introduction needed, I will go straight to my 5 points as per below.
1. Too many articles and news on AIRASIA. I lost count on the number of times I saw articles on AIRASIA in the past one week. I believe there is at least 10 articles on AIRASIA (from newspaper, blogger and others). In one of the lunch that I attend, even young executives are discussing AIRASIA. I believe that we have reached the stage which match Warren Buffet famous quote... "Be Fearful When Others Are Greedy".
2. The dilution to EPS is real. While the reasons given by Tony Fernandes looks good (that the corporate exercise will reduce the gearing and install confidence), bottom line is minority shareholders stake in AIRASIA will be diluted. And there is risk to it. What if big institutional investors don't approve the corporate exercise in the EGM? To me, it is hard to defend and vote to support a dilutive corporate exercise. The Edge Weekly pointed out that rights issue would have been better (with Tony Fernandes underwriting high portion of the rights issue) to achieve the same effect.
3. DCA fee increase is negative to AIRASIA earnings. The Star articles say that "Airlines operating out of Malaysia will be expected to pay up to ten times more in fees charged by the Department of Civil Aviation Malaysia (DCA) effective April 15." Full article here http://www.thestar.com.my/business/business-news/2016/04/06/skyhigh-dca-fees/
4. RM2.00 psychological barriers seems hard to break. Investors chase up the share price but not many are willing to pay above RM2.00. I believe that the party is over. Be honest and ask yourself whether you will want to buy more at RM2.00 or above. If your answer is NO, others may be thinking the same too. If nobody willing to buy, it is hard for the share price to surge above RM2.00.
5. Its RSI is not cheap. At 61, the RSI (a technical indicator) is quite near the 70 (Overbought level).
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 (buyu/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) - (fayeTan) - 5 reasons to be Fearful When Others Are Greedy on AIRASIA
http://klse.i3investor.com/blogs/genzinvestor/94531.jsp
