Summary of March 2026
Portfolio @ End of Mac26
On the last day of Feb26, someone decided to start a war and the stock market plummeted in Mac26 as a result.
Initially many people thought that US & Israel war on Iran will end swiftly within a week or two but now it seems like it might drag on for months.
Stock market in the world suffers due to the fear of inflation & economy slowdown caused by the escalating crude oil price.
As Iran closes the Strait of Hormuz which is responsible for 20% of the world's oil & gas passage, Brent crude oil price surged toward USD120/barrel from USD72/barrel before the war.
Currently it stays above USD100/barrel while there is still fear that oil & gas facilities in the region might get destroyed further.
My portfolio suffered badly and lost 6.4% in the month, though it still manage to hang on with a small 1.3% gain YTD.
The only stock that perform well is unsurprisingly Hibiscus which rose 41%.
I plan to "average down" some stocks in my portfolio during the sell down but unfortunately I just bought quite a few stocks in the last 2 months so I have only 25% of cash left.
Part of the cash was quickly thrown into AAX once its share price fell below RM1.30. However, it continues to drop further to below RM1.00..
Why RM1.30? It's because this is the price of new shares AAX issued to pay for the acquisition of Airasia Aviation Group Limited from Capital A.
From my own calculation earlier, the EPS of AAX might potentially reach 30sen after the corporate exercise, and I'd give it a conservative target price of RM2.00.
Thus, I hope to accumulate more AAX shares but I need to do it more carefully as jet fuel has doubled and we don't know how soon it will "normalize".
AAX has reintroduced fuel surcharge and raised ticket price to counter the increasing cost but I think it will not be enough. Its financial results in the coming quarters will certainly get a big hit.
AAX does not have any fuel hedge in place, making it particularly vulnerable to the spiking fuel cost as a low cost carrier with thin margin.
Jet fuel is said to account for 30-40% of its overall cost.
Maybank IB estimates that every USD1 increase in jet fuel price above USD85 per barrel would reduce AAX's earning estimate by about RM75mil per year.
Since the start of the war, jet fuel price has shot up more than 100% from USD90/barrel to over USD200/barrel now.
This means if this situation stays, AAX earning will be reduced by at least RM2bil per quarter!
Even after the US declares victory and leave, Iran might not open the Strait of Hormuz completely to retaliate against its neighbours that support the US.
In this case, the crude oil supply might not fall to the pre-war level.
From the chart above, jet fuel price did surge to USD180/barrel before in Mac22 when Russia invaded Ukraine. It took more than a year for the price to drop to the pre-war level.
AAX's share price touched the lowest at 98sen since the war started. It's a 50% drop from RM1.98 before the war, making it the worst performing aviation stock in Mac26.
I believe that there will be a time when the jet fuel price falls below USD100/barrel again, and AAX's share price will be trading at above RM2.00.
The question is how long do we need to wait?
