CAPITALA: Strategic Realignment Drives Significant Headline Profit, Core Segments Propel Future Growth

Performance Review

A major investment bank has affirmed a “BUY” recommendation for a prominent regional player, setting a target price of RM0.25 (+25.0%) from its last traded price of RM0.20. This positive outlook follows a remarkable FY2025, which saw the company report a headline net profit of RM9.0 billion, a significant turnaround from a net loss of RM881.7 million in the previous year. This impressive result was primarily propelled by a substantial one-off gain from strategic asset disposals.

While the reported headline profit for FY2025 significantly exceeded expectations, driven by a RM9.7 billion gain from the disposal of its aviation business, the company recorded an estimated core net loss of RM788.3 million, which fell below both the bank’s and consensus estimates. Despite the core loss, the bank maintains an optimistic view, citing strong traction across all five key business segments – Asia Digital Engineering (ADE), Teleport, AirAsia MOVE, AirAsia Next, and Santan – which are expected to bolster contributions in the upcoming quarters.

Segment Highlights

Asia Digital Engineering (ADE) demonstrated robust performance in 4QFY25, with revenue surging 31% year-on-year (YoY) to RM247 million and EBITDA climbing 77% YoY, maintaining a steady margin of 23%. This growth was fueled by capacity expansion and new aircraft maintenance activities. Management plans to significantly expand hangar lines and is actively exploring regional merger and acquisition opportunities.

Teleport, the group’s logistics venture, also recorded significant growth, with 4QFY25 revenue rising 10% YoY to RM367 million. Total cargo volume increased 19% YoY, leading to a positive net operating profit of RM5.2 million, a stark improvement from a loss in the prior year. Teleport successfully secured USD50 million in pre-IPO growth capital and is focused on expanding its network and collaborations across Asia.

AirAsia MOVE experienced a substantial 110.8% YoY jump in 4QFY25 revenue to RM151.8 million. Gross booking value (GBV) grew 1% YoY to RM2.67 billion, supported by marketing investments. The segment’s EBITDA and NOP margins remained healthy. New product launches like Duty Free, MOVE TIX, and EasyCancel are progressing well, and the company is in negotiations to raise approximately USD20 million in capital to support further growth initiatives.

AirAsia Next (AANext), responsible for brand management and licensing, saw its revenue more than quadruple YoY to RM40.5 million, aligning with the airline’s revenue trend. However, EBITDA and NOP margins slipped due to BigPay’s performance, increased staff costs from internal reallocation, and higher marketing expenses. AANext is strategically integrating its Rewards and BigPay platforms to build a comprehensive fintech and loyalty ecosystem.

Santan, the food and beverage business, also performed strongly, with revenue up 12% YoY to RM64.1 million. While it experienced softer EBITDA and NOP margins due to non-recurring charges and higher staff costs, Santan is actively pursuing a growth strategy to expand into a broad-based B2B food distributor and a multi-channel retail brand.

Future Outlook and Recommendation

The investment bank remains optimistic about the company’s future prospects, underpinned by several key catalysts. These include the impending exit from Practice Note 17 (PN17), with a target date set for 2Q 2026, potential listings of its various business verticals, and a sustained recovery in travel demand. Given the strong growth momentum in its core segments and strategic initiatives, the bank reaffirms its “BUY” recommendation with a target price of RM0.25, representing a significant upside.