Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

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<a href="https://www.smartkarma.com/entities/japan-airlines-co-ltd" target="_blank" data-smartkarma-citation="entities:1184:1" rel="noopener">Japan Airlines (9201 JP)</a> plans to raise around US$1.4bn in order to shore up its balance sheet and aid its longer term transformation.
 I have covered the background of the deal in my earlier write-up, <a href="https://www.smartkarma.com/insights/japan-airlines-placement-given-the-uncertain-outlook-might-need-further-correction" target="_blank" rel="noopener">Japan Airlines Placement - Given the Uncertain Outlook, Might Need Further Correction</a>.
</div><div><div id="annotable-executive_summary-2">In this insight, I'll talk about the updates since then.</div></div>


Japan Airlines (9201 JP) plans to raise around US$1.4bn in order to shore up its balance sheet and aid its longer term transformation.
 I have covered the background of the deal in my earlier write-up, Japan Airlines Placement - Given the Uncertain Outlook, Might Need Further Correction.
In this insight, I'll talk about the updates since then.

Japan Airlines Placement - Tricky Tricky, Needs to Correct

<a href="https://www.smartkarma.com/entities/japan-airlines-co-ltd" target="_blank" data-smartkarma-citation="entities:1184:1" rel="noopener">Japan Airlines (9201 JP)</a> plans to raise around US$1.4bn in order to shore up its balance sheet and aid its longer term transformation.
The shares are down over 50% this year, after having corrected by another 10% today.
In this insight, I'll talk about the deal dynamics and run the deal through our ECM framework.

Japan Airlines (9201 JP) plans to raise around US$1.4bn in order to shore up its balance sheet and aid its longer term transformation.
The shares are down over 50% this year, after having corrected by another 10% today.
In this insight, I'll talk about the deal dynamics and run the deal through our ECM framework.

Japan Airlines Placement - Given the Uncertain Outlook, Might Need Further Correction

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

On the 9 June, <a href="https://www.smartkarma.com/entities/cathay-pacific-airways-ltd" target="_blank" data-smartkarma-citation="entities:243:1" rel="noopener">Cathay Pacific Airways (293 HK)</a> disclosed in its massive recapitalisation proposal <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0609/2020060900356.pdf" target="_blank" rel="noopener">announcement</a>, that:
<blockquote>
By the fourth quarter of 2020, Cathay Pacific’s management team will recommend to the Board the optimum size and shape of the Cathay Pacific Group to meet the air travel needs of Hong Kong while keeping Cathay Pacific’s financial status at a healthy level and meeting its responsibilities to Shareholder - <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0609/2020060900356.pdf" target="_blank" rel="noopener">page 6</a>
</blockquote>
This morning, Cathay <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1021/2020102100213.pdf" target="_blank" rel="noopener">announced</a> its board had approved the following restructuring plan:
<ul>
<li>Its wholly-owned Cathay Dragon, will cease its operations with effect from today. It is intended that regulatory approval will be sought for a majority of Cathay Dragon’s routes to be operated by the Company and wholly-owned subsidiary low-cost carrier, Hong Kong Express Airways.</li>
<li>Approximately 8,500 positions across the Cathay Pacific Group (including Cathay Dragon) will be eliminated, accounting for around 24% of the Cathay Pacific Group’s headcount of 35,000.</li>
<li>Hong Kong-based cabin and cockpit crew of Cathay Pacific will be asked to agree to changes in their conditions of service which are designed, inter alia, to match remuneration more closely to productivity and to enhance market competitiveness.</li>
</ul>
This restructuring will cost HK$2.2bn, to be funded internally. 
Cathay is still running at a HK$1.5-HK$2bn/monthly loss. This restructuring is expected to save HK$500mn/month once fully implemented in 2021.
Separately <a href="https://www.smartkarma.com/entities/swire-pacific-ltd-cl-a" target="_blank" data-smartkarma-citation="entities:10433:1" rel="noopener">Swire Pacific (A) (19 HK)</a>'s discount to NAV appears to have met support at around the current NAV discount.
As always, more below the fold.

On the 9 June, Cathay Pacific Airways (293 HK) disclosed in its massive recapitalisation proposal announcement, that:

By the fourth quarter of 2020, Cathay Pacific’s management team will recommend to the Board the optimum size and shape of the Cathay Pacific Group to meet the air travel needs of Hong Kong while keeping Cathay Pacific’s financial status at a healthy level and meeting its responsibilities to Shareholder - page 6

This morning, Cathay announced its board had approved the following restructuring plan:

Its wholly-owned Cathay Dragon, will cease its operations with effect from today. It is intended that regulatory approval will be sought for a majority of Cathay Dragon’s routes to be operated by the Company and wholly-owned subsidiary low-cost carrier, Hong Kong Express Airways.
Approximately 8,500 positions across the Cathay Pacific Group (including Cathay Dragon) will be eliminated, accounting for around 24% of the Cathay Pacific Group’s headcount of 35,000.
Hong Kong-based cabin and cockpit crew of Cathay Pacific will be asked to agree to changes in their conditions of service which are designed, inter alia, to match remuneration more closely to productivity and to enhance market competitiveness.

This restructuring will cost HK$2.2bn, to be funded internally. 
Cathay is still running at a HK$1.5-HK$2bn/monthly loss. This restructuring is expected to save HK$500mn/month once fully implemented in 2021.
Separately Swire Pacific (A) (19 HK)'s discount to NAV appears to have met support at around the current NAV discount.
As always, more below the fold.

<a href="https://www.smartkarma.com/entities/qantas-airways-ltd" target="_blank" data-smartkarma-citation="entities:677:1" rel="noopener">Qantas Airways (QAN AU)</a> aims to raise around US$933m (A$1.36bn) via an institutional placement and another US$343m (A$500m) via a share purchase plan. The company has also announced a host of other cost savings measures and is now gearing up for an extended slowdown which will last a year or two.In this insight, I'll talk about the deal dynamics and run the deal through our ECM framework.

Qantas Airways (QAN AU) aims to raise around US$933m (A$1.36bn) via an institutional placement and another US$343m (A$500m) via a share purchase plan. The company has also announced a host of other cost savings measures and is now gearing up for an extended slowdown which will last a year or two.In this insight, I'll talk about the deal dynamics and run the deal through our ECM framework.

Qantas Placement - Banking on a Trans-Tasman Travel Bubble

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Equity Bottom-Up

Tourism activities have started to pick up again in China and airports have started to reopen again, increasing the air traffic volume from a low base. The number of domestic flights processed has rebounded in March 2020 by 98% MoM and another 13% on April MoM. 
The China Tourism day, which falls on May 19th each year, witnessed alternative efforts from operators to deal with the restrictions amidst the pandemic. The Shanghai Disneyland theme park reopened to visitors with reduced capacity on May 11, the first Disneyland theme park in the world that has resumed operations since the outbreak of COVID-19. 
Foreign airlines such as Asiana and Korea Air have stated that they plan to start providing flights to China again by the end of June, hinting that demand for air travel has started to come back.  
There are so many unknowns on how the airlines are going to operate given the measures to cope with the "new normal".  Given the low share price base for Chinese airlines in general, the risk/reward ratio for going long Travelsky and short some Chinese airlines is not that attractive. 
At 15x earnings, 22% discount to the level right before the COVID-19 outbreak, and 50% lower than in FY 2017 while it is also worth highlighting that currently, the company is trading at the lowest PE multiples in 3 years, Travelsky trades at an undemanding valuation and a continuous share price recovery should be expected. 
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/135/036/original/image_14558500221590112697719.png?1590112700" class="editor-image img-responsive" data-smartkarma-image-id="135036"></figure>
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source: Capital IQ
</div>
<div class="content-highlight">
Thanks in advance for reading this insight!  Please give this a thumbs up if you find this useful and follow me on Smartkarma for more original and actionable insights; it's free, anonymous, and helpful. Please also feel free to post a comment or message me directly if you have any queries regarding this insight. Your continuing support renders a continuity of more original and actionable insights.  
</div>

Tourism activities have started to pick up again in China and airports have started to reopen again, increasing the air traffic volume from a low base. The number of domestic flights processed has rebounded in March 2020 by 98% MoM and another 13% on April MoM. 
The China Tourism day, which falls on May 19th each year, witnessed alternative efforts from operators to deal with the restrictions amidst the pandemic. The Shanghai Disneyland theme park reopened to visitors with reduced capacity on May 11, the first Disneyland theme park in the world that has resumed operations since the outbreak of COVID-19. 
Foreign airlines such as Asiana and Korea Air have stated that they plan to start providing flights to China again by the end of June, hinting that demand for air travel has started to come back.  
There are so many unknowns on how the airlines are going to operate given the measures to cope with the "new normal".  Given the low share price base for Chinese airlines in general, the risk/reward ratio for going long Travelsky and short some Chinese airlines is not that attractive. 
At 15x earnings, 22% discount to the level right before the COVID-19 outbreak, and 50% lower than in FY 2017 while it is also worth highlighting that currently, the company is trading at the lowest PE multiples in 3 years, Travelsky trades at an undemanding valuation and a continuous share price recovery should be expected. 


source: Capital IQ


Thanks in advance for reading this insight!  Please give this a thumbs up if you find this useful and follow me on Smartkarma for more original and actionable insights; it's free, anonymous, and helpful. Please also feel free to post a comment or message me directly if you have any queries regarding this insight. Your continuing support renders a continuity of more original and actionable insights.  


Australia

Qantas Airways Limited provides transportation of passengers through two airlines including Qantas (full service carrier) and Jetstar (low cost carrier), operating international, domestic and regional services. The Company also includes Qantas Frequent Flyer and Qantas Freight which generates diverse revenue streams and adds value for customers and investors.

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Qantas Airways (QAN AU)

Japan Airlines Placement - Tricky Tricky, Needs to Correct

Japan Airlines (9201 JP) plans to raise around US$1.4bn in order to shore up its balance sheet and aid its longer term transformation.

Sumeet Singh

Japan Airlines Placement - Given the Uncertain Outlook, Might Need Further Correction

Japan Airlines (9201 JP) plans to raise around US$1.4bn in order to shore up its balance sheet and aid its longer term transformation.

Sumeet Singh

Cathay Pacific: Exit The Dragon

With passenger travel unlikely to return to pre-COVID-19 levels until 2024, the inevitable staff cut is announced, together with the cessation of...

David Blennerhassett

Qantas Placement - Banking on a Trans-Tasman Travel Bubble

Qantas Airways (QAN AU) aims to raise around US$933m (A$1.36bn) via an institutional placement and another US$343m (A$500m) via a share purchase...

Sumeet Singh

Travelsky (696): A Safe Way to Fly

Tourism activities have started to pick up again in China and airports have started to reopen again, increasing the air traffic volume from a low...

Henry Soediarko

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