AirAsia X shares face retreat on end of stabilising action
BY YVONNE TAN
PETALING JAYA: Maybank Investment Bank (Maybank IB) has ceased its stabilising action for AirAsia X Bhd after buying a total of 65.53 million shares post-listing of the company on Bursa Malaysia.
Analysts now say without further support from the stabilising manager, the stock could see some downward pressure when it’s re-quoted on Monday after the Hari Raya break.
“The share price could take a beating, but investors may want to scoop up some value from there,” said one analyst, who has been tracking the company since it was listed on July 10.
RHB Research initiated coverage on the low-cost, long-haul carrier on Monday at RM1.65 per share, premised on an adjusted financial year (FY) 2014 forecast enterprise value/earnings before interest, taxes, depreciation, amortisation and rent multiple of 8.5 times.
AirAsia X told Bursa Malaysia yesterday that during the stabilising period between July 10 and Aug 7, Maybank IB had undertaken stabilising actions where a total of 65.53 million shares, or 8.3% of the total number of shares offered under the initial public offering (IPO), were purchased at RM1.25 per share.
It had also exercised the over-allotment, also known as the greenshoe option, for a total of 52.98 million shares on Aug 7.
The total purchases made under the price stabilising action of 65.53 million shares and the exercise of the over-allotment option for 52.98 million shares fully cover the 118.51 million shares that had been over-allocated in the IPO for AirAsia X, it said.
A greenshoe is a clause included in an underwriting agreement that allows underwriters to buy up to an additional 15% of the shares sold under the IPO within 30 days of listing.
The greenshoe option and the price stabilisation mechanism are used to manage the supply of shares post-IPO, which, in turn, helps steady fluctuating stock prices.
Recall, Maybank IB had previously said that the price stabilisation mechanism aimed to enhance confidence in the market for new issues of shares and facilitate fund-raising activities by ensuring that the demand for shares in an IPO can be met in an efficient manner, and that price volatility during the period immediately after listing can be minimised.
As disclosed in the AirAsia X IPO prospectus, as the stabilising manager, Maybank IB can purchase up to 118.51 million shares in AirAsia X within the first 30 days of listing.
This is as a result of an over-allotment option granted by shareholders Orix Airline Holdings Ltd and Manara Malaysia I Ltd to Maybank IB as the stabilising manager.
In its initiation report, RHB Research, which had tagged a “buy” call on the company, said it foresaw a robust earnings compounded annual growth rate of 136% from FY12 to FY15, propelled by rising passenger traffic as a result of an expanding fleet, growing yields and new ancillary initiatives.
AirAsia X last traded at RM1.19. It made some RM34mil in net profit for its financial year ended Dec 31, 2012.
Publish date: 08/08/13