Asia Digital Engineering Well-placed To Seek Listing Due To Strong Earnings, Strategic Growth

By Kisho Kumari Sucedaram & Mikhail Raj Abdullah

SEPANG, Dec 2 (Bernama) -- Maintenance, repair and overhaul (MRO) service provider Asia Digital Engineering Sdn Bhd (ADE) is set to chalk up significantly higher revenue next year, which will position it well financially to seek listing sooner rather than later.

“Our optimism stems from the demand for aircraft maintenance services which continues to surpass supply,” ADE’s young and energetic chief executive officer (CEO), Mahesh Kumar told Bernama in a recent interview.

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Just days after this interview, ADE, which posted commendable earnings in the first and second quarters, turned in a 12 per cent year-on-year increase in its third quarter’s revenue to RM184 million.

ADE, a subsidiary of Capital A, which also owns AirAsia, is looking forward to better financial results for this year and next, thanks largely to the thriving MRO business in Southeast Asia, strategic acquisitions and continued infrastructure 

The third quarter earnings were driven by increased revenue from engineering maintenance services fuelled by expanded capacity and geographic coverage, which in turn led to higher component sales.

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“ADE is well on track to meet its goal of becoming the leading MRO in Southeast Asia,” Mahesh said in the interview held in the company’s sprawling 14-line hangar located in the Kuala Lumpur International Airport (KLIA).

He said ADE’s financial position has also put it on a clear path to becoming one of the top contenders for listing within the Capital A group.

Mahesh said the company is well on track to meet its goal of becoming the leading MRO service provider in Southeast Asia.

He did not indicate a specific timeline for the listing but remains optimistic about ADE’s future growth.

“I leave that to the shareholders. But in terms of what we need to achieve, the goal is that we are on track.

“We are profitable, hitting our revenue targets and margins as expected. The results for the past few quarters show consistent growth, and our projections for the upcoming year are even stronger,” he said.

ADE recently opened its 14-line hangar, the largest in the country, in KLIA. The 20.25-acre facility is located within the KLIA Aeronautical Support Zone 1 (ASZ 1) under Malaysia Airports’ KLIA Aeropolis development.

During the launch on Sept 26, 2024, Capital A CEO Tan Sri Tony Fernandes said ADE is poised to be Capital A’s first business unit to be listed on Bursa Malaysia, as it has the potential to rival the value of the group’s low-cost airline AirAsia Bhd.

“The value that is being created here is huge,” he added.

Mahesh also highlighted that the company’s ongoing efforts to expand its footprint through strategic mergers and acquisitions (M&A) would push the business to expand across ASEAN.

Business strengthening, plans for expansion on track

The company recently ventured into new markets, notably Indonesia, through a joint investment with PT Garuda Maintenance Facility Aero Asia Tbk (GMF) of Indonesia for landing gear services.

“GMF has European Union Aviation Safety Agency (EASA) approval and Federal Aviation Administration (FAA) approval from the United States. ADE acquired 49 per cent of that entity,” he said.

He described the acquisition as a “very good M&A deal based in Jakarta, which has been operating for six years and able to service both B737 and A320 aircraft landing gears.

Mahesh said ADE is looking into various M&A opportunities within a similar business model, particularly for aircraft engines in the ASEAN region.

ADE is also considering further M&A opportunities, including partnerships with other airlines and original equipment manufacturers (OEMs).

In addition to the M&A plan, he said the company is in talks with Malaysia Airports Holding Bhd (MAHB) to lease an additional 20 acres from within the KLIA radius for a space to accommodate 10 MRO lines.

“We are planning to expand to 20 lines by 2026 and target 30 lines by 2028,” he said.

ADE’s other facilities are a two-line hangar in Senai, Johor Bahru, and another single-line maintenance facility in KLIA.

Further to these plans, ADE is expanding its facilities to meet the growing demand for MRO services by acquiring another warehouse located 20 minutes away from the newly launched hangar in KLIA.

“Since we are expanding our business, we are acquiring another warehouse nearby, spanning 120,000 square feet,” he said.

With a clear growth strategy, strategic partnerships, and a robust financial position, ADE is well-positioned for its potential IPO, marking another milestone in its evolution in the global aviation industry.

– BERNAMA