Destini Forms JV for Commercial Aviation Venture
KUALA LUMPUR (June 22): Destini Aviation Sdn Bhd (DASB), a wholly-owned subsidiary of integrated engineering solutions provider Destini Bhd , has formed a joint venture (JV) with United Kingdom-based Avia Technique Ltd in efforts to expand into the commercial aviation sector.
In a statement today, Destini (fundamental: 1.7; valuation: 0.8) group managing director Datuk Rozabil Abdul Rahman said that with the company’s vast experience in defence aviation maintenance repair and overhaul (MRO) and survival equipment, it is ready to expand into the commercial aviation sector.
“Realising the potential of the aviation industry, the Malaysian government has recently announced The National Aerospace Blueprint (2015 to 2030) that focuses on developing the country to become the leading aerospace nation in Southeast Asia by 2030, contributing approximately RM32.5 billion in revenue and 32,000 high-income jobs,” he said.
He added that through the JV and also through its recently acquired 80% stake in SafeAir Technical Sdn Bhd for RM1.4 million, DASB is set to benefit from new business opportunities in the commercial aviation MRO services, as the Asia Pacific region is expected to need about 3,000 new planes, worth US$1.9 trillion over the next decade.
Safe Air, which currently manages about 5,000 turnarounds per annum, is in the advanced stage of discussions with another four major airlines for potential contracts, one of which will be a long-term contract.
“With these potential contracts, SafeAir is poised to handle approximately 60,000 turnarounds per annum, within the next two years, which will generate about RM24 million annual turnover,” said Destini in its statement. While SafeAir provides technical line maintenance, the JV will provide component MRO for the airline sector, which includes carrying out inspection, repair and overhaul services of aircraft components specifically oxygen equipment, survival equipment including evacuation slides, rafts and life jackets, fire suppression, environmental control system, electrical equipment and fuel and hydraulic systems. Rozabil said that the JV shall carry out the MRO activities in Malaysia and for purely airline customers for the ASEAN Region. “For India and Japan, it will be on a case-to-case basis. With Destini-Avia and SafeAir under our belt, we are ready to spread our wings into the commercial aviation sector.
“We have the technical and financial capabilities to position ourselves as a possible strategic service provider forMalaysia Airlines and AirAsia Bhd for technical line maintenance and component MRO. We fit nicely into their cost rationalisation programme,” added Rozabil. Destini shares closed down 1.5 sen, or 2.27% today to 64.5 sen with a market capitalisation of RM519.13 million.
(Note: The Edge Research’s fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)