Tuesday, May 30, 2017

Sold Insas and Bought Airasia

Market has been correcting. I am hence taking the opportunity to move my portfolio from Insas to Airasia.

Insas is cheap, but I guess the company is not much transparent which I do not like. On the other hand, Airasia is transparent to an extent that many shareholders would have not been comfortable with it.

There are not many companies that have tried as hard to sell its business to investors as much as Airasia to a degree where some people are not comfortable.

Anyhow, I see where Tony Fernandes has been selling. He is aggressive. The company is growing.

When I bought the shares at RM1.12 for this fund 1-1/2 years ago, Airasia was on the verge of turning around as competition loosened up. This time around, that observation really happens.

I can see that the price competition has not gone as hard as few years ago. The new MAS CEO is concentrating on what MAS is supposed to concentrate on.

Malindo is getting into becoming a full-fledged airline. I am now questioning, if that is the case would they serve food on board? Now Lion Air owns both full fledged and low costs.

I can also see, things are already probably getting easier for Tony and his crew members. He is selling hard but probably not as hard as previously. His delivery and model is being appreciated, but still I do not see it being appreciated by Malaysian stock market.

The low costs airline model is very fine. What we see is that Asian airlines are now facing the brunt. For the matter of local tourism, countries have to embrace airlines that are willing to bring traffic into their countries. You can see Cambodia is offering Airasia to have a hub. They probably can see things clearer than many countries as that country is smaller. Small guys tend to do things that is different from the rest.

I think there is a long runway for companies like Airasia - in the mold of 10 or more years. Whenever I say Airasia is like Ryanair in Europe, I sometimes get shot down. Not 100% similar but there is this similar good trend.

Imagine, 20 years ago, low costs was not even in existent in Asia. Now, Singapore saw that and scrambled to buy up Tiger.

Airline is a high capex business but yet again things are changing as there are more leasing companies whom are willing to provide competitive rates. Hence, there increasingly is a model where there will be company that holds assets, do leasing. Then there are companies doing the operations i.e. negotiating with airports, selling price competitive tickets etc.

I see things are getting clearer now.

By the way, this is a very good account from its AGM. One can see that things are so fresh where 2 years ago, we do not see initiatives in Airasia, coming on board.

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