Wednesday 29 June 2011

How Real is MAS Privatization?

Nothing is certain in this world.

While every reserach houses are desperately calling a "sell" on MAS, MAS is flying high instead.

MAS at historic low of RM1.40 seems a bit "inappropriate" for a "Best Airline" award winner. However, news are all against it: loss-making Q1 and a high probability of another loss in Q2. MAS happily announced the purchase of another 20 Airbus, but its rival Airasia announced a purchase of 200 Airbus at the same time! Who will have the youngest fleet then?

    MAS admits defeat to Airasia by delisting?

MAS share price started to surge since last friday with heavy volume. Many retail investors scratch their head. Is it due to announcement of new planes purchase? It's unlikely as this is not a fresh news.

Then the next Monday the reason is known. A report came out in The Star: "Privatise Malaysia Airlines (MAS) but list Firefly, MAS Engineering, MasKargo and even its terminal services, suggested Maybank IB in a recent research report."

It is a "suggestion" by Maybank investment bank. As MAS's price is now very low, I guess investors who buy at current price can get some good earning if MAS really goes private. This may be the main reason that push the share price up.

The next day, MAS came out to clarify things. Interestingly, the chairman didn't say "No, it's not in the plan". He said: “No options are off the table. It's the shareholders' call. We can put the option on the table but it is still the shareholders call”, and the share price continue its rise.

The reply is fair enough. Everything has a possibility. If I were him, probably I'll give the same remark even though there is 0% possibility of privatization. Why not? At least it can give a much needed boost to MAS share price.

Delisting and relisting may be good for the company, but is it fair to long term shareholders who bought and accumulated its share at a much higher price?

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