Wednesday 19 November 2014

AirAsia X facing turbulence? (2)

AirAsia X announced its results, they were rather bad, a loss over the quarter of RM 211 Million for the quarter.

Shareholders' equity has decreased to RM 865 Million. However, that is including RM 414 Million of deferred tax assets, without that the shareholders' equity would only be RM 451 Million.

Its retained losses are RM 341 Million, but again including the deferred tax assets, without those it would be RM 755 Million.

The above makes the article in The Edge more likely to be true, at least partially. One snippet:

"The circular stated that basic salary, fixed allowance, productivity allowance and overtime would be paid on Oct 24, while variable allowances such as flying allowance, sector allowance, night stop allowance and commission would be paid on Oct 31. Posting allowances for charter flights will be paid on Nov 5. Describing the unprecedented payment issue as a “temporary setback”, the management of AirAsia X blamed the payment delay to the “late arrival of incoming funds”."

Is the above information as defined in the category "material information"?

If there are two companies, A and B, in all aspects exactly the same, but company A delays paying its employees, and company B does not have those issues. Would there be a difference in the price investors are prepared to pay for company A versus company B?

I think there is. Which means that the information is indeed "material information".

According to the "Corporate Disclosure Guide" from Bursa:

The share price of AirAsia X has indeed performed badly in the last ten days, declining from RM 0.80 to RM 0.645, or 19%.

When was the above information regarding the financial problems available? The Edge doesn't write it, but it does write "would be paid on Oct 24", indicating that the circular most likely was distributed before October 24th.

And thus, as far as I can see, AirAsia X might not immediately have disclosed material information.

CG Watch 2014, which I rate highly, rates Corporate Governance in AirAsia X in the top half of its list of Malaysian companies. I am afraid I can't agree with them on that point.

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