Disposal of Shares – AirAsia Berhad

AirAsia

AirAsia

Earlier today I disposed off my holdings in AirAsia Berhad at RM2.95 per share. I had purchased 4,300 units of AirAsia mid June 2015 for an average price of RM1.66 per unit. Factoring in dividends and brokerage fees, I made a gain of RM5,669.75 which is a 79% capital gain.

Why Air Asia?

As most of you know, the Company’s share price took a tumble for the past year and only recently sky-rocketed. Ever since Tony Fernandes and co took over the Company, I’ve always seen AirAsia as very well managed. With the Company’s slump back in 2015, I saw an opportunity to purchase one of the most well known company in Malaysia if not South East Asia.

AirAsia Tony Fernandes
AirAsia CEO – Tony Fernandes (Source: Time Magazine)

So, the big question was and still is – Why Air Asia? A simple approach to investing would be to just take a step back and look around us, what product do we as consumers use every day? As for travel, which airline does the average Malaysian consumer fly every single time they travel? The answer is without the shadow of a doubt – Air Asia.

‘World’s Best Low Cost Airline’ has been on every flight I’ve been on with Air Asia, that got me thinking on one such trip – they must be doing something right. Immediately, I got to looking into the Company’s financials after my holiday.  Despite some heavy debts which was typical of a young growing company, I liked what I saw. I then only had to wait for the opportune time to purchase the stocks of the World’s Best Low Cost Airline.

Dividends or Capital Gain

As Air Asia was a young and rapidly growing company, I in turn as a shareholder did not expect a high dividend to be paid out but instead for the Company to retain those earnings for further expansion.  I received a dividend of RM172 back in June this year, translating to a 2.41% yield for me.

Why Sell?

I would’ve loved to have held on longer to Air Asia but the stock is way overvalued at its current price and I felt it was time for me to take profit. After holding the stock for close to 14 months, I made a 79% profit, a pretty good investment if you ask me.

Conclusion

I will continue keeping tabs on Air Asia further down the road and if the opportunity comes, I will not hesitate to buy more of the airline’s stock provided the fundamentals remain.

A little sidebar here –  I’m currently looking closely at Axiata and Spritzer as potential companies to invest in. With the sale of AirAsia stocks, I am currently sitting on a war chest of close to RM30K.

As always, thank you for reading.

4 thoughts on “Disposal of Shares – AirAsia Berhad

  1. Hello, I’m still new to investing and eager in learning. When you said AA stock was way overvalued, how did you determine whether a stock is over or undervalued?

    I’ve been reading too but I’m just curious on your own ways of determining it. If you would share, that would be great input for my learning self.

    By the way, nice sharing. It’s really enjoyable reading your posts.

    Cheers.

    • Hey Dinhae,

      Valuation is a very subjective matter. I do fundamental analysis, for me to go in depth into it will take ages.
      So the gist of it is, I go through a company’s financials, as far back as 10 years if I can. You need to start reading financial reports if you’re interested in a company’s fundamentals. You can message me on our FB page if you have further questions, I’d be more than happy to help with more specific questions.

      Cheers!
      Thanks for reading.

      Thanks for reading.

  2. Loved Ur investment strategy n decisn made. Indeed AA had been escalated much & timely too to dispose off to reap d gains

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