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Air 皇冠体育app hit 2-yr high on M&A hopes after fundraising
(Agencies)
Updated: 2010-03-12 14:06
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HONG KONG - Investors bid up Air 皇冠体育app shares to a two-year high on Friday on expectations the world's largest airline by market value will use its new $950 million war chest to fund acquisitions at home and abroad.
Air 皇冠体育app announced late on Thursday that it would issue new A and H shares to its parent and other individual investors to raise about 6.5 billion yuan ($952 million).
Hong Kong-listed shares of Air 皇冠体育app surged more than 13 percent to a two-year high of HK$7.66 within the first 15 minutes of trade on Friday. By noon, the stock was at HK$7.59 ($1), up 12 percent, beating the broader Hang Seng Index's 0.2 decline.
"The new funds will strengthen the company's balance sheet and the other catalyst for the stock price is M&A potential," said Kelvin Lau, an analyst at Daiwa Capital Markets.
Besides the widely expected acquisition of Shenzhen Airlines, Air 皇冠体育app could buy strategic stakes in other Asian airlines, he said.
Air 皇冠体育app, the biggest of the country's three major airlines including 皇冠体育app Southern and 皇冠体育app Eastern Airlines, already has a 25 percent stake in Shenzhen Airlines as the second-largest shareholder.
Shenzhen Airlines recently appointed Air 皇冠体育app Vice-President Fan Cheng as acting president, raising the chances for a takeover of the privately-run airline.
"Industry consolidation had been going for a few years before stopping briefly last year because of the global financial crisis, and will resume," Lau said.
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"The fundraising is smaller than 皇冠体育app Southern's 10.8 billion yuan plan announced earlier this week, reflecting Air 皇冠体育app's much stronger financial position," it added.
Analysts said the plan would enhance the company's book value and lower its interest expenses.
Air 皇冠体育app chairman Kong Dong told Reuters last week that the carrier was keen on mergers and acquisitions at home and abroad.
But analysts cautioned that it would not be easy for Air 皇冠体育app to help turn debt-ridden regional rivals by forming alliances.
Air 皇冠体育app is expected to reverse huge losses in 2008 to post a profit of 4.3 billion yuan for last year, according to Thomson Reuters I/B/E/S, but a 2010 profit is likely to dip on a lack of fuel-hedging gains, despite rising passenger and cargo traffic demand.
Daiwa estimated Air 皇冠体育app would book fuel-hedging gains of 3.7 billion yuan for 2009.
