LIFETIME MEMBERSHIP Will SIA share price see daylight soon? Confidence in air travel has taken severe knocks following multiple waves of COVID-19 infections in various countries, not to mention the devastating second wave in India. Yet against this backdrop, USA and European countries are seeing drastic drops in COVID-19 infections and deaths due to aggressive vaccination programmes.
In March 2021, I wrote that SIA share price could be in for an explosive destiny following the release of full-year financial result FY20/21. Back then, I had predicted that the full-year losses to be around $3.5 billion but it turned out that the actual losses amounted to $4.2 billion. Prior to the result release, SIA share price suffered some correction, falling from $5.70 in April to the current $4.80.
As expected, the correction for SIA share price is limited as most investors had anticipated the record losses prior to the release of the result. The question now is: how would the market react to the $6.2 billion mandatory convertible bonds (MCBs). For sure, the MCBs will strengthen the national carrier’s balance sheet. At the same time, the MCBs will not be immediately dilutive to SIA share price as the bonds will only mature in June 2030. In this regard, I am inclined to think that market should react positive to the cash call.
Of course, not all investors would agree with me. With rights issue, you don’t know if you are throwing good money after bad. But the good thing about this MCBs is that if existing shareholders choose not to take up the offer, their equity stakes are unlikely to be diluted. In my opinion, I …Read more