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KUALA LUMPUR: Investors reacted positively to Capital A Bhd’s proposed US$1bil Nasdaq listing and its shares were among the most actively traded stocks on Bursa Malaysia.
The counter rose 0.5 sen, or 0.61% to 83 sen with 24.64 million shares traded. It has appreciated 27% so far this year.
Capital A has entered into a letter of intent (LOI) with Aetherium Acquisition Corp (GMFI), a special purpose acquisition corporation (SPAC) listed on the Nasdaq in the United States.Under the deal, Aetherium Acquisition will acquire all the issued and outstanding share capital of Capital A International, resulting in the formation of a new listed entity.
Capital A said the proposed business combination will be at an indicative equity value of US$1bil based on an independent valuation of the AirAsia brand.
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MIDF Research said this merger is one component of Capital A’s larger strategy to address and uplift its PN17 status.
“It presents an avenue for the group to unlock the value of the AirAsia brand. It will also provide the group with exposure to the US capital markets via Nasdaq, which are generally known to be more receptive to financial endeavors of this nature,” the research house said.
The expected impact of the proposed business combination will be disclosed in a detailed announcement when the definitive agreement is signed tentatively in 1Q24.
Capital A will no longer generate revenue and potential profits from AirAsia brand royalties.
“After the proposed business combination is finalised, anticipating a pro forma gain from this merger, it should improve the group’s shareholders’ equity which stood at -RM10.20bil as of 2QFY23.
“Moreover, post the completion of the merger, the group will have the opportunity for indirect participation in the profits of the disposed business through its ownership of consideration shares and consideration securities,” MIDF said.
“We maintain ‘neutral’ on the stock with unchanged target price of RM0.90 (based on 8x FY24F EPS) as it is trading close to its pre-pandemic mean. Key catalysts for potential growth would be a faster-than-expected return of the network and capacity to pre-Covid levels,” it added.
