After much delay, the acquisition of Capital A's aviation business by AirAsia X (AAX) will be completed soon.
AirAsia is undoubtedly a well-known aviation brand which makes Malaysian proud. After the acquisition is completed, is AAX at current share price of RM1.60+ undervalued or overvalued?
To recap, AAX will acquire AirAsia Aviation Group Limited (AAAGL) & AirAsia Berhad (AAB) from Capital A for RM3bil & RM3.8bil respectively.
AAAGL provides air transport service from the Philippines, Thailand, Indonesia & Cambodia, while AAB provides air transport service from Malaysia.
AAX itself provides medium to long-haul air transport service from Malaysia (& Thailand).
After this corporate exercise, AAX will become an attractive aviation group housing all AirAsia short, medium & long haul air travels.
However, AAX currently has a net current liabilities. How can it afford to swallow 2 companies valued at RM7.8bil combined?
