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=MARKET BUZZ: Malaysia AirAsia X Rights Issue Risk High; Higher Costs Weigh-CIMB

KUALA LUMPUR (Nov 08) -- AirAsia X faces "high" risk of a second rights issue as higher oil prices, stronger U.S. Dollar trend and rising airport taxes strain its balance sheet, CIMB Investment Bank says in note to investors. Adds, AirAsia X needs almost MYR400 million in new funds for working capital and to pay term loans in FY19F, if firm forced to undertake rights issue, "we think AAX is worth only MYR0.13/share." Notes, airline has collected only MYR50/pax in passenger service charges (PSC) from Jul. 1 2018 although Malaysia Airports Holdings has billed it for MYR73/pax; AirAsia X may have to fork out more than MYR60 million of own cash to pay the difference to Malaysia Airports in 2H18. "The longer AAX delays passing through the higher PSC, the more adverse the financial impact will be, in our view," house says. Slashes target price to MYR0.16 from MYR0.30; reiterates Reduce call. Stock currently unchanged at MYR0.25.

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