Assessing the Value of Capital A’s Non-Aviation Assets

Capital A Bhd’s Strategic Shift Highlights Non-Aviation Asset Value

Capital A Bhd (KL:CAPITALA) is undergoing a significant transformation as it seeks to unlock value from its non-aviation businesses amid a major corporate restructuring. The company is in the process of divesting its short-haul aviation operations to its medium-haul affiliate, AirAsia X Bhd (KL:AAX), with the transaction expected to conclude by May. This strategic move marks a decisive shift away from its origins as a budget airline operator, repositioning Capital A as a technology and logistics-focused enterprise.

Composition and Valuation of Non-Aviation Portfolio

Capital A’s non-aviation portfolio includes Asia Digital Engineering Sdn Bhd (ADE), Teleport Commerce Malaysia Sdn Bhd, BigPay Malaysia Sdn Bhd, Santan, Move Digital Sdn Bhd (AirAsia Move), and its branding unit, Capital A International (CAPI). Analysts estimate the combined value of these six businesses to be between RM5 billion and RM6.5 billion, though valuations vary significantly across individual units. Among these, ADE, the group’s maintenance, repair, and overhaul (MRO) arm, alongside logistics provider Teleport, are widely regarded as the primary drivers of future growth. While Teleport has yet to achieve profitability, market sentiment remains optimistic about its long-term potential.

In the financial year ended December 31, 2024 (FY2024), ADE and AirAsia Move were the leading contributors to Capital A’s non-aviation profit after tax (PAT), which totaled RM162 million. ADE’s valuation is particularly notable, estimated between RM900 million and RM1 billion. Kenanga Research recently valued ADE at RM900 million, applying a price-earnings ratio (PER) of 10 times for FY2025. For comparison, SIA Engineering Co Ltd, the MRO subsidiary of Singapore Airlines, trades at a PER of 16.8 times based on projections by UOB KayHian for its financial year ending March 2026.

Growth Prospects and Operational Performance

The ongoing recovery in the aviation sector and increasing demand for aircraft maintenance services are expected to bolster ADE’s market position. Despite still expanding operations at its new hangar facilities, ADE achieved a robust 27% revenue growth in FY2024, underscoring its strong growth trajectory.

In contrast, AirAsia Move experienced a 19% year-on-year revenue decline in FY2024. Nevertheless, analysts anticipate a recovery as travel restrictions ease and the trend of digital nomadism gains momentum. Positioned to capitalize on renewed travel demand, AirAsia Move offers integrated digital solutions designed to meet the needs of modern travelers seeking flexibility and convenience.

Challenges and Market Implications

Capital A’s strategic pivot from aviation to technology and logistics presents several challenges. The successful integration of new business models and operational capabilities will be essential to the group’s transformation. Market reactions are expected to be mixed; while some investors welcome the technology-driven direction, others remain cautious about potential execution risks. Additionally, competitors may respond by accelerating their own technology investments or forming strategic partnerships, thereby intensifying competition within the sector.

As Capital A advances its restructuring, the effective monetization and scaling of its non-aviation assets will be critical. The group’s ability to meet growth expectations in technology and logistics will ultimately determine whether this bold strategic shift translates into sustained shareholder value.