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SIA stocks remained negative despite fund-raising and supplementary budget announcements

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4 years ago

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On Friday morning (27 March), following the announcement of the government’s Resilience Budget worth S$48.4 billion to combat the COVID-19 pandemic, Singapore stocks opened higher 2.6 per cent. As of 9.03am, the Singapore Straits Times (STI) rose 65.65 points or 2.6 per cent to reach 2,553.19. At 3:55pm, the STI value was slightly lower in the 2,530s at about 1.5 per cent.

Following this, the stock price of Singapore Airlines (SIA) showed signs of volatility following the airline’s move to issue new shares and bonds at a sharp discount in order to raise S$8.8 billion funding.

After around 10 minutes of the opening bell, the counter plummeted by as much as 10.1 per cent or from S$0.66 decrease value to S$5.85 decrease value.

At about 9.40am, the stock price rebounded to S$6.31, after which it dropped again to S$6.07 at 1.33pm. This marks a 6.6 per cent decline or S$0.43 decline from the closing of the day before.

SIA was one of the most actively traded counters on SGX so far, with close to 14 million shares of SIA having been traded during that period.

The trading stop imposed on Thursday morning (26 March) was lifted on Friday morning as the stock trading began.

On Thursday night, SIA proposed the fund-raising, with Temasek fully underwriting the process.

On the basis of three rights shares per two existing shares held by shareholders, a renounceable three-for-two rights up to 1.77 billion new shares priced at S$3 will be issued. From this, S$5.3 billion was raised.

Based on the last transacted price of S$6.50 on 25 March, the issue price denotes a discount of around 53.8 per cent. SIA stated that the theoretical ex-rights price will be S$4.40.

Regarding the new share sale, SIA will obtain approval from shareholders.

By issuing a 10-year mandatory convertible bond (MCB) based on the basis of 295 Rights MCBs per 100 existing owned shares, SIA is also hoping to raise up to S$3.5 billion. The bonds come with zero coupon, valued at S$1 each respectively.

“This is an exceptional time for the SIA group. Since the onset of the Covid-19 outbreak, passenger demand has fallen precipitously amid an unprecedented closure of borders worldwide. We moved quickly to cut capacity and implement cost-cutting measures,” remarked Peter Seah, Chairman of SIA, on Thursday.

Mr Seah added, “The board is confident that this package of new funding will ensure that SIA is equipped with the resources to overcome the current challenges, and be in a position of strength to grow and reinforce our leadership in the aviation sector.”

Echoing the same sentiment, Dilhan Pillay Sandrasegara, Temasek International’s Chief Executive, noted, “This transaction will not only tide SIA over a short-term financial liquidity challenge, but will (also) position it for growth beyond the pandemic.”

Mr Sandrasegara also hinted that SIA will receive Tamesek’s full support in the airline’s efforts to renew itself by acquiring new fuel-efficient aircraft over the next few years to modernise its fleet as part of its expansion strategy.

The Singapore government announced the supplementary budget on Thursday, called the Resilience Budget, and part of the provision is the 75 per cent wage offset for the aviation sector so that the collapse of the sector can be prevented.

Facing the largest crisis up to now, SIA announced on Monday that it would slash its capacity by a huge margin up to 96 per cent until the end of April. SIA and SilkAir now see 138 of their combined 147 fleet grounded whereas Scoot, the budget unit, will suspend almost all of its network. What’s more, led by Chief Goh Choon Phong, SIA’s senior management will take salary cuts, with 30 per cent cut from April.

Furthermore, other measures include voluntary no-pay leave as a choice for workers, furlough option for staff on re-employment contracts, and different days of compulsory no-pay leave for pilots, executives, and associates.

These measures will affect 10,000 workers overall. Nonetheless, SIA, by partnering with various parties, is finding ways to allow workers on no-pay leave to earn an income through other means.

In light of all of this, despite the Resilience Budget and the fund-raising efforts, Singapore Airlines Limited saw a negative percentage change in its stock price by -6.15% with 16,514,200 trading volume. Other companies that share similar experience are Jardine Strategic Holdings Limited and Singapore Exchange Limited at -0.90 per cent and 1.44 per cent respectively.

Meanwhile, the top performers are companies such as Genting Singapore Limited (+8.13%) and SATS Ltd (+6.63%), followed by Dairy Farm International Holdings Limited (+5.57%) and Mapletree Logistics Trust (+5.19%).

This possibly suggests that it will take more to prop up SIA beyond the fund-raising and Resilience Budget, or that the market is still adjusting to these two events at this point in time.

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Taiwan’s FSC rejects CTBC Financial’s bid to acquire Shin Kong Financial, favoring Taishin’s merger plans

Taiwan’s Financial Supervisory Commission rejected CTBC Financial’s tender offer to acquire Shin Kong Financial, raising concerns about its plan, while Taishin Financial moves closer to a merger with Shin Kong. Both companies have scheduled shareholder meetings for 9 October.

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2 days ago

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17 September 2024

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On 16 September 2024, Taiwan’s Financial Supervisory Commission (FSC) rejected an application from CTBC Financial Holding Co. to launch a tender offer for Shin Kong Financial Holding Co., potentially clearing the path for Taishin Financial Holding Co. to proceed with its proposed merger with Shin Kong Financial.

Jean Chiu, vice chairperson of the FSC, stated at a press conference that CTBC Financial failed to provide a comprehensive implementation plan for the acquisition. CTBC had proposed acquiring between 10% and 51% of Shin Kong Financial’s shares initially, with plans to later fully integrate the company.

However, the FSC raised concerns over CTBC’s lack of detailed provisions on how it would manage various potential outcomes, particularly if it failed to secure full control of Shin Kong.

Additionally, the FSC highlighted gaps in CTBC’s understanding of the financial health of Shin Kong’s life insurance subsidiary, as well as a lack of firm commitments regarding raising the capital size of this subsidiary.

This uncertainty, combined with the method of payment proposed by CTBC—using a mix of cash and its own stock—raised concerns that the tender offer could negatively affect shareholders due to potential fluctuations in CTBC’s stock price during the transaction process.

CTBC’s proposal, announced on 20 August, included an offer of NT$4.09 (US$0.13) per share in cash and an exchange of 0.3132 CTBC shares for each Shin Kong share, amounting to NT$14.55 (US$0.46) per share. This bid was labeled by Taishin Financial as a hostile takeover attempt, as Shin Kong Financial’s board had not approved the offer.

In response, Taishin Financial, which has been vying for Shin Kong through a merger, revised its stock swap offer on 11 September.

The new offer included 0.672 Taishin shares plus 0.175 preferred shares for each Shin Kong share, translating to NT$14.18 per share—closer to CTBC’s offer. Taishin had earlier disclosed on 22 August its original plan to offer 0.6022 shares of its stock per Shin Kong share, which amounted to NT$11.32 (US$0.36).

Chiu emphasized that tender offers based on stock payments are rare in Taiwan, with only six cases since the 2002 revision of tender offer regulations.

She referenced Fubon Financial Holding’s acquisition of Jih Sun Financial in 2023, where cash was used instead of shares, to highlight how tender offers have traditionally been handled in the local market.

Chiu concluded by stating that although Taiwan’s financial market operates on free-market principles, takeovers should avoid disrupting market order and respect corporate stability.

Taishin Financial and Shin Kong Financial are set to hold a special general meeting on 9 October to secure shareholder approval for their merger plan, which will then require the FSC’s endorsement.

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Business

Times Bookstores to close after nearly four decades in Singapore

Times Bookstores will cease operations in Singapore after nearly four decades, with its final outlet at Cold Storage Jelita closing on 22 September 2024. The closure is seen as being attributed to high rents, low sales, and rising operational costs, reflecting challenges faced by physical bookstores in Singapore.

Published

3 days ago

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16 September 2024

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Times Bookstores will end its operations in Singapore after nearly 40 years, as its last remaining outlet at Cold Storage Jelita on Holland Road is set to close on 22 September 2024.

In a farewell statement posted on Instagram on 16 September, the English book retailer, established in 1978, invited customers to visit the store one final time. “Our happily ever after has finally come,” the post read. “It is with both a heavy heart and a sense of fulfilment that we announce the closure of Times Bookstores.”

The closure of Times Bookstores has been anticipated for several years. The company, owned by regional consumer group Fraser and Neave Limited, closed its branches in Plaza Singapura and Waterway Point in February 2024.

The shutdowns triggered a discussion in Singapore’s literary community about how to better support bookstores.

Struggles Facing Book Retailers

Times Bookstores has been affected by increasing rent, low sales, and rising operational costs. The Covid-19 pandemic exacerbated its challenges, with the business quietly closing outlets at Marina Square and Paragon in 2021.

A key warning came in 2019 when the retailer closed its 8,000 sq ft Centrepoint branch, once one of Singapore’s largest bookstores.

These closures reflect a broader struggle for physical bookstores in Singapore. Rising rent, higher goods and services taxes (GST), and increasing printing costs have driven book prices up, making it difficult for traditional retailers to compete.

Popular bookstore also shut its Marine Parade outlet on 18 June 2023, citing similar reasons, while Books Kinokuniya closed its JEM branch on 9 May 2022 due to slow sales and rental costs.

Future of Singapore’s Bookstores

Following the closure of Times, few large bookstore chains remain in Singapore. Books Kinokuniya, the largest bookstore in Singapore, continues to operate its flagship store at Takashimaya Shopping Centre.

According to a spokesperson from Toshin Development Singapore, cited by the Straits Times, Kinokuniya remains a key tenant, though no specific renewal dates were disclosed. The spokesperson added that Kinokuniya continues to engage with the landlord regularly to appeal to patrons and remain in trend.

Although Times Bookstores will no longer have physical stores in Singapore, its book distribution business, which supplies books from international and local publishers to other retailers, continues to operate.

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