Capital A weathers rising geopolitical conflict, maintains upbeat outlook

KUCHING (March 18): Capital A Bhd (Capital A) is expected to remain resilient despite ongoing geopolitical tensions in the Middle East, with analysts maintaining a positive outlook on the group following its recent Investor Day briefings.

According to both Maybank Investment Bank Bhd (Maybank Research) and MBSB Investment Bank Bhd (MBSB Research), the conflict has had minimal impact on Capital A’s core businesses, even as its share price has come under pressure due to sentiment around geopolitical tensions and ecosystem linkages to AirAsia.

Capital A’s recent share price weakness comes largely from Capital A’s share in AirAsia X (AAX) whose share price has declined by 39 per cent since the start of the war due to rising jet fuel costs and weaker investor sentiment

This in turn has reduced Capital A’s shareholder’ equity, but MBSB Research stresses that it remains firmly positive at round RM610 million, well above the threshold that would trigger financial distress classification.

“This does not trigger Practice Note 17 (PN17), as equity continues to stand at 107 per cent of share capital,” said the research arm.

Maybank Research added that as AAX is classified as an investment in its accounts and not as an associate, the depreciation in AAX’s share price will not be reflected as a loss in its income statement.

Instead, Capital A’s management has guided that Asia Digital Engineering (ADE), its maintenance, repair and overhaul (MRO) business, and Santan, its food and beverage (F&B) segment, have not been affected by raw material shortages.

Teleport, its logistics arm, has also been also to pass through higher jet fuel costs via fuel surcharges without much impact to its volume.

And finally, AirAsia Move, its online travel agency (OTA) platform, and AirAsia Next, its licensing business, has actually been benefitting from higher airfares, translating to higher commissions and licensing fees.

MBSB Research added that travel demand may shift toward intra-Asia routes, which could further support the group’s ecosystem given its strong regional positioning.

Capital A is maintaining its financial year 2026 (FY26) revenue, earnings before interest, taxes, depreciation and amortisation (EBITDA), and net operating profit (NOP) estimates at RM3.8 billion, RM600 million, and RM 266 million, respectively.

This is broadly in-line with the forecasts from Maybank Research and MBSB Research who both maintain ‘buy’ calls on Capital A alongside target prices (TPs) of RM0.75 from Maybank Research and RM0.77 from MBSB Research.

On its financial recovery, Maybank Research notes that Capital A’s exit from PN17 status could be slightly delayed.

While earlier expectations were an exit during Mya or June 2026, Maybank Research guides that they understand Capital A may not be able to present the recent profitable 4Q25 quarter to Bursa Malaysia for consideration.

“Instead, it may have to present a profitable 1Q26 and 2Q26 to Bursa Malaysia instead. This implies that Capital A could only have its PN17 classification uplifted in Aug 2026,” they said.