SIA share price rises from the ashes

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.

SIA share price

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.

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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 highly doubt that SIA management will let the bonds mature in 2030, thereby allowing the dilution of SIA share price.

Based on the recent operating data, SIA share price should have bottomed and the way to go is up. According to the management, there was consistent increase in revenue for the past three quarters. Operating losses also narrowed from $1.037 billion in Q1FY20/21 to $318 million in Q4FY20/21. In this article, I will share my insights on the outlook for SIA share price in FY2021.

Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. Furthermore, I am not vested and have never invested in SIA before. Whether SIA share price will surge or collapse has no impact on me. Thus, this article is not meant to induce readers to make any form of investment decisions.

SIA share price bottoming out

Looking at the current pandemic situation, it seems that major economies such as US and China have largely brought the virus under control. Vaccines have become the biggest weapon against the spread of COVID-19. In spite of this, virus mutants had emerged to throw a spanner in the works for Asian countries. In Singapore, major events like the Shangri-La Dialogue and the World Economic Forum have been cancelled due to the recent infection spikes. Nonetheless, the overall mood is in stark contrast to last year, when the world was thrown into turmoil with the virus outbreak and absence of vaccine.

As SIA is a premium international airline, SIA share price is [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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Updated: May 30, 2021 — 2:39 pm