Precise Investors

Tuesday, December 6, 2022
Stocks & Shares

Short sellers aim at AirAsia after stock more than doubles


AirAsia shares have bounced back amid bets the worst may be over as global vaccine rollouts boost hopes for global reopenings

Short sellers are taking aim at AirAsia Group Bhd after the stock more than doubled from recent lows.

The carrier, once the pioneer of a low-cost flying revolution in Asia, is now the third-most shorted stock in Malaysia, exchange data show. Top Glove Corp remains at the top of short sellers’ list, which includes other glove makers such as Kossan Rubber Industries Bhd and Hartalega Holdings Bhd.

AirAsia shares have bounced back amid bets the worst may be over as global vaccine rollouts boost hopes for global reopenings. The rally has left the gap between analysts’ 12-month price target for the stock and its current value at the widest in nearly three years. Its relative strength index rose to 82 on Monday, a level signalling overbought conditions.

While a revival in travel will be exponentially rewarded in airline stocks, in the case of AirAsia there might be some concern around balance sheet, said Nirgunan Tiruchelvam, head of consumer sector equity research at Tellimer. Within the cohort of airline stocks, it might be looking a bit vulnerable.

With the airline business taking a hit from the pandemic, AirAsia was forced to recast its business.

It launched a super app last year offering services from travel and shopping to logistics and financial services.

The carrier is looking to introduce a flying-taxi business as early as next year.

The budget carrier was also boosted by the emergence of a new substantial shareholder. Stanley Choi Chiu Fai, chairman of Hong Kong-listed hotel and casino operator International Entertainment Corp, raised his stake in AirAsia to 8.96% on February 18.

AirAsia was highlighted a month ago in the online community by Bursabets, with the title ‘Any BULLS wanna fly with AirAsia?’ The stock trades at 1.21 ringgit versus the 12-month price target . It has soared 37% so far this year.


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