SIA shares gain nearly 17% in two days amid heavy trading

By value, SIA was the most actively traded counter on the Singapore bourse on the morning of Nov 25, 2020. PHOTO: ST FILE

SINGAPORE (THE BUSINESS TIMES) - Shares of Singapore Airlines (SIA) have been making steady gains for two days on heavy volumes.

The stock jumped 8.2 per cent or $0.36 on the day to $4.77 at around 9.15am on Wednesday (Nov 25). That's about 15.7 per cent higher than Monday's close, before the rally began, and 16.6 per cent above Friday's close.

It eased slightly to trade at $4.64 as at 11.12am on Wednesday, up $0.23 or 5.2 per cent, with 25.2 million shares changing hands.

By value, SIA was the most actively traded counter on the Singapore bourse on Wednesday morning.

The bulk of its volume came from large trades - each valued at more than $150,000. Almost a hundred such large trades were done as at 10.59am on Wednesday, according to ShareInvestor data.

The counter started climbing on Tuesday amid active trading, surging 8.4 per cent or $0.34 to close at $4.07 on 34.1 million shares.

That's nearly seven times its average daily turnover of about five million shares, based on the monthly average of SIA's cumulative trading volume during the last three months, according to the Singapore Exchange's website.

The last time it closed above such levels was on May 5, the last day of cum-rights trading before SIA's $8.8 billion cash call which included a rights issue of shares and a 10-year mandatory convertible bond (MCB).

The dip in SIA's share price on Monday, following the last-minute postponement of the Singapore-Hong Kong air travel bubble, was less severe than the drop seen in the stock of its Hong Kong peer, Cathay Pacific Airways.

SIA finished Monday 0.5 per cent or $0.02 lower, while Cathay Pacific fell 4.2 per cent or HK$0.30 to end at HK$6.83, according to ShareInvestor data.

Cathay Pacific likewise recovered on Tuesday, advancing 7.8 per cent to HK$7.36 at the close, before moving up further by about 1 per cent to trade at HK$7.43 as at 10.48am on Wednesday.

The air travel bubble was put on hold at the eleventh hour, less than 24 hours before the scheduled launch on Sunday. A flight each from SIA and Cathay Pacific were originally planned to take off at 10am.

The Singapore and Hong Kong governments will announce in early December as to when the flights will restart.

CGS-CIMB wrote in a research note on Monday that while the suspension of the bubble was disappointing, it will likely be part of "a series of stops and starts on the arduous road to recovery".

Investors have also been optimistic about the impending arrival of Covid-19 vaccines, pushing SIA's stock to outperform the Straits Times Index by 5.3 per cent in the past month, CGS-CIMB analyst Raymond Yap noted on Monday.

He reiterated its "add" call on SIA and target price of $4.57 then, and said that "patient investors with a one-year horizon should be able to reap the rewards of upcoming Covid-19 vaccinations". CGS-CIMB recommended investors to buy on any dips.

Separately, SIA on Tuesday night announced $500 million worth of 3.5 per cent, 10-year notes, to be issued on Dec 2. The offer, launched with an initial size of $300 million, was upsized after "strong appetite was apparent from a select group of private investors".

Net proceeds from the issuance will be used for general purposes, including to refinance existing borrowings.

With the $500 million notes, SIA has raised about $12.7 billion since the start of FY21. That includes $8.8 billion from the rights issue and MCBs, $2 billion from secured financing, $850 million via a five-year convertible bond announced two weeks ago, and more than $500 million through new committed lines of credit and a short-term unsecured loan.

On July 30, SIA's stock sank to its lowest in more than two decades, after the flag carrier posted its biggest quarterly loss as travel demand evaporated due to the coronavirus pandemic.

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