Thursday, January 14, 2016

Airasia will not move upward until all Wellington and EPF's holdings are sold?

There is no doubt that both EPF and Wellington, the 2 larger shareholders are selling their stakes almost on a daily basis, for whatever reasons which I am not aware of.

Wellington is a large fund manager based in Boston while everyone in Malaysia knows EPF. Besides the founders i.e. Tune Air, these are the 2 largest shareholders of Airasia. The selling by these 2 definitely have impact on the share price of Airasia as it dropped from more than RM2.30 to as low as RM0.77 in a span of less than 3 quarters.

As below are the holdings of Wellington where it has dropped from 12.901% in 30 June 2015 to 7.845% in 31 December 2015 - 5.056% drop.

Wellington's holdings as at 30 June 2015 (12.901%)

Wellington's holdings dropped to 7.845% in 31 Dec 2015

Holdings of EPF between the same period 30 June to 31 Dec 2015: dropped from 7.991% to 5.797% - reduction of 2.194%

Closing as at 30 June 2015 - total 7.991%

As at 31 Dec 2015 - 5.797%

From the observation, it seems that the selling is not tapering off and as mentioned Airasia has dropped substantially as per below chart.

Airasia's share price over last 1 year

Another observation:

Airasia's foreign shareholders has dropped to 47.62% in 31 Dec 2015 from 52.96% in 30 June 2015 i.e. a reduction of 5.34%. Ironically, this is almost the same in terms of sellout by Wellington (5.056%)

Few trends in the last tumultuous period for Airasia and market:

- there has been attack on Airasia's accounting by GMT, a Hong Kong advisory firm;
- Airasia Indonesia went through a fresh injection exercise and in that event, it caused some concerns where it may lose its license to operate in the event it did not recapitalize;
- foreigners have been a net seller in Malaysian stocks;
- of course crude oil price has dropped to fresh lows;
- Airasia has the license to buyback as approved by shareholders in December 2015, as I presume as an act of self-defence;
- financials have not picked up although operational cashflow has improved.

If it takes Wellington to sell 5% in 6 months, they will need another 8 months to fully dispose off their holdings of 7.8% if they ever want to reduce to zero their exposure in Airasia. EPF may take a longer period.

What's your say?

In short run, market is a voting machine, the long run it is a weighing machine.

Mostly would know I took the view of bullishness as I am of the opinion that Airasia should head up rather than down as its peers in the same business has been enjoying record valuation due to the attractive low oil price. Obviously, my opinion have not been agreed upon by both EPF and Wellington. Well, they have more stocks to sell as compared to me whom have less cash to buy - but take note that I will still buy and with knowledge that I have the luxury of time.


1 comment:

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