Singapore Airlines *Official* (SGX:C6L)

[edwinttt1978]

Why would anyone holding SIA mother share want to sell the rights for shares instead of subscribing to it ?

Just curious, can someone who does not hold SIA mother share just buy the rights and then subscribe to it ?

One reason could be half-heartedness, especially after reading this.

“We made that decision in terms of the airline business. We took money out of the business basically even at a substantial loss. We will not fund a company that... where we think that it is going to chew up money in the future."
-Warren Buffett having sold all of its shares in the four largest US airlines

 

[cdiony]

Hi, first time experience in right issue so need to seek clarifications.

I have 4k SIA (average price around $9.50) and entitled to subscribe 6K at $3. After ex-date, the price should be around $4.20.

If I have no intention to subscribe, can I just sell my 6K when the right issue starts to trade and collect $18K?

Not sure if I can do that cause I am looking to cut some losses in the 4K mother shares which I may want to hold.

Thank you

 

[sharinganez]

I believe that most will exercise their rights here @ $3.
What about MCB? anyone taking it? If you're doing that, whats the benefit?

 

[hwbest]

you won’t be able to collect $18k selling 6k rights. Assuming SIA trades at $4 on the day you sell your rights, the rights should be trading around $1. So, your 6k rights would be worth around $6,000.

Hi, first time experience in right issue so need to seek clarifications.

I have 4k SIA (average price around $9.50) and entitled to subscribe 6K at $3. After ex-date, the price should be around $4.20.

If I have no intention to subscribe, can I just sell my 6K when the right issue starts to trade and collect $18K?

Not sure if I can do that cause I am looking to cut some losses in the 4K mother shares which I may want to hold.

Thank you

 

[htngwilliam]

Well, if you are a shareholder and you buy shares at $10-12, die die have to subscribe and take a gamble. After rights issue, I think $3.50 - 4.20 is a fair value. If covid19 don’t get better, potential is at $2. Even if flight resume, air ticket price will likely drop by 20% hence affecting revenue. SIA management better trim their own pay by 30-40%

 

[hwbest]

post covid revenue also depends on the number of airlines going out of business. If 3/4 of all airlines collapsed and closed down for good, that’ll bode well for SIA’s revenue.

Well, if you are a shareholder and you buy shares at $10-12, die die have to subscribe and take a gamble. After rights issue, I think $3.50 - 4.20 is a fair value. If covid19 don’t get better, potential is at $2. Even if flight resume, air ticket price will likely drop by 20% hence affecting revenue. SIA management better trim their own pay by 30-40%

 

[yoyokid]

Rights or no rights, etc, investors are still at the the 'mercy' of the market...

.. if the market continues to tank further (ie trends down), holders will suffer further loss... esp if the price moves down closer to the rights price...

.. if the market is in a bull run, of course those who subscribed to, or bought the rights in the market, will huat ah tua tua...

 

[reddevil0728]

Well, if you are a shareholder and you buy shares at $10-12, die die have to subscribe and take a gamble. After rights issue, I think $3.50 - 4.20 is a fair value. If covid19 don’t get better, potential is at $2. Even if flight resume, air ticket price will likely drop by 20% hence affecting revenue. SIA management better trim their own pay by 30-40%

executive compensation is a function of revenue anyway

 

[arctician]

Hi, first time experience in right issue so need to seek clarifications.

I have 4k SIA (average price around $9.50) and entitled to subscribe 6K at $3. After ex-date, the price should be around $4.20.

If I have no intention to subscribe, can I just sell my 6K when the right issue starts to trade and collect $18K?

Not sure if I can do that cause I am looking to cut some losses in the 4K mother shares which I may want to hold.

Thank you

Cum right share should be around $1+, to execute on the option u have to pay $3 to get mother share.

Just imagine if an investor buy at $3 from you, then pay another $3 execute on the right, but XR become $4.5..no one will buy in that case.

 

[yoyokid]

post covid revenue also depends on the number of airlines going out of business. If 3/4 of all airlines collapsed and closed down for good, that’ll bode well for SIA’s revenue.

The market is self-adjusting...

.. when conditions are improving, you can be sure many airlines will start to sprout again...

 

[henrylbh]

Wouldn't it be better to sell off the mother share ?

And sell the rights MCB as well. But still not enough to pay for the rights Share.

 

[htngwilliam]

Which country has no domestic business? Even if Japan, US, China lockdown, they can fly within the country. Maybe SG can fly from Paya Lebar to Tengah

 

[henrylbh]

Please note the word “assuming”.

It’s a 10 years mandatory conversion

The conversion price of $4.84 at end of 10 years is guaranteed even if SIA rise to say $10. If down, then suck thump. So up to individual to think whether price of SIA will remain low in 10 years' time. If SIA decides to redeem earlier, holders are assured of the compounded interest which is fairly attractive as a bond ... 4% per annum (first 4 years), and the subsequent 3 years is 5% per annum and the subsequent 3 years is 6% per annum. If the view that is SIA price would remain low as long as 10 years, then there is no reason to subscribe for the rights Share. Dispose CR and invest elsewhere.

 

[htngwilliam]

Actually if you look at their profit, does it look attractive? Profit margin is low. Risk is high, returns is low. Personally I don’t know why many are willing to take a punt. Because it is backed by government?

 

[cdiony]

you won’t be able to collect $18k selling 6k rights. Assuming SIA trades at $4 on the day you sell your rights, the rights should be trading around $1. So, your 6k rights would be worth around $6,000.

Thank you. So in your opinion it is better to subscribe?

After the right shares trading ceases, any idea the time frame where all shares are integrate to mother shares?

Is it true that securities firms will only show record of mother shares of 4K and the 6K right issue will be reflected in CDP? As such after integration my CDP will show 10K but my record in securities firm is still 4K.

Thanks again

 

[vsvs24]

And sell the rights MCB as well. But still not enough to pay for the rights Share.

I sold my SIA shares because it was bought using CPF. If it is in cash I might consider keeping and get the rights since bank interest rate is low. Didn't want to put more CPF money into SIA. Lost some money but treat it as cutting losses. No need to worry how it will turn out.

 

[arctician]

Actually if you look at their profit, does it look attractive? Profit margin is low. Risk is high, returns is low. Personally I don’t know why many are willing to take a punt. Because it is backed by government?

for those who went through right issues before, they will know this is a one off opportunity to stag for excess rights.

 

[arcan3]

Will one be able to purchase it at S$3.00 when one dont hold any of the existing shares?

Main issue is if SIA delisted. Only option is for Temasek holdings to pay for the MCB at the early redemption agreement, correct?

I.e. all accumulated interest (4-6% p.a.), paid together with principal in cash.

It is not mandatory for MCB to be redeemed even when SIA is delisted. It depends on the entity taking over SIA. Temasek will not take over SIA because if SIA need to raise cash again, Temasek will use minority shareholder to share the load rather than taking it private and shouldering the burden alone.

 

[Sinkie]

for those who went through right issues before, they will know this is a one off opportunity to stag for excess rights.

Priority is given for rounding up, follow by major share holders, then remaining for minority

 

[edwinttt1978]

Hi, first time experience in right issue so need to seek clarifications.

I have 4k SIA (average price around $9.50) and entitled to subscribe 6K at $3. After ex-date, the price should be around $4.20.

If I have no intention to subscribe, can I just sell my 6K when the right issue starts to trade and collect $18K?

Not sure if I can do that cause I am looking to cut some losses in the 4K mother shares which I may want to hold.

Thank you

In theory, the rights would be trading around $1.40 if using the TERP of $4.40 which is 31.8% from $6.50 as on 25 March.

If using $5.95 as the closing price of SIA today, the TERP will be $4.06 and the rights would be trading around $1.06.

So, you can get back only around $6k from selling the rights.

If you strongly believe SIA is a great way to fly, you should instead apply for excess rights.