Financial News
Author: Ou Jiajun
2020-06-10 07:00
Last update date: 2020-06-10 07:00Cathay Pacific (0293) announced a 39 billion yuan capital restructuring plan. In addition to raising at least 27.3 billion yuan from the government through the issuance of preferred shares and transitional loans, it also reached out to existing shareholders to ask for money and tossed out a "11 for 7" rights issue plan. Raised 11.7 billion yuan. According to the arrangement, the share price per share is 4.68 yuan, a discount of up to 46.9% compared to the pre-suspended price (8.81 yuan), and the number of rights issues is equivalent to about 63% of the issued shares. Under the "large discount, large proportion" rights issue, does the existing minority shareholder offer rights? Is it good for the retailer without goods to get the bottom?
Liang Jiewen: If the stock price falls sharply, there is a bottom value rate
Liang Jiewen, investment manager of Hongko Securities, pointed out that although a large discount and a large proportion of rights issues, the aviation industry is far from seeing prospects, but under the government's "unlimited guarantee", it is expected that after Cathay has obtained nearly 40 billion yuan of funds, "the points are all hit. "Year", coupled with the recovery of the external stock market in the aviation industry recovery concept, I believe that Cathay Pacific will resume trading today (10th).
As to whether the existing minority shareholders should issue rights shares, he pointed out that if the share price of Cathay Pacific did not plunge after the resumption of trading, the shareholders who did not have a lot of stocks could immediately sell out and stop the loss. There are growth sectors in technology stocks. As for the long-term shareholders who choose to continue to hold the stock, he pointed out that they must participate in the rights issue. The flight will be normalized at the end of the year and the stock price will return to a high level. However, it must not be neither stop loss nor rights issue, and the share-free rights will be diluted.
As for out-of-stock investors, Liang Jiewen pointed out that if Air China (0753) and Swire Pacific (0019) are willing to cover, coupled with government support, the stock price of 4.68 yuan is expected to have great support. Refer to US aviation stocks and Boeing A lot of low-level rebounds. If the stock price is close to 5 to 6 yuan after the resumption of trading, there is a bottom value rate, which is worth buying a "speculative" low.
Liang Jiewen pointed out that if Cathay Pacific fell sharply after the resumption of trading, it could be "speculative" to draw a low bet. (Photo by Zhang Haowei)
Shareholders may find it difficult to receive dividends in a few years
The Hong Kong government pumped water to Cathay Pacific this time, the biggest benefit is interest income, but for small shareholders, Cathay Pacific must pay dividends to the government that subscribes to preferred shares before it can pay dividends to ordinary shareholders, plus the operating environment Expectations continue to be difficult. The International Air Transport Association expects to return to pre-crisis levels only by 2023, and minority shareholders will worry about dividends in the next few years.
According to the Cathay Pacific notice, from the date of issuance of preferred shares and warrants, the annual interest rate will be 3% per annum after three years, 5% in the fourth year, 7% in the fifth year, and 9% per year thereafter. Dividend once every six months. Based on the priority amount subscribed by the government, the initial annual interest rate is nearly 600 million yuan. The Financial Secretary Chen Maobo also expects Cathay Pacific to repay the government for at least "three years".
Liang Jiewen pointed out that it is difficult for Cathay shareholders to receive dividends in the next few years, but Cathay is now at a juncture of survival. If the government does not contribute to rescue, Cathay will "exercise", so ordinary shareholders may not reap dividends because "the company is not buried at any time." .
Government attitude: Cathay Pacific "Too big to fail"
Under the epidemic, Cathay Pacific’s operating environment was severe, and it had lost 4.5 billion yuan in the first four months of this year. Cathay Chairman He Yili pointed out at a press conference today that he currently burns 2.5 billion to 3 billion yuan a month. The company’s unlimited cash level at the beginning of the year is about 20 billion yuan. . This means that if there is no capital injection plan, in the worst case, Cathay’s cash will only burn enough until September and October this year.
Liang Jiewen believes that Cathay Pacific does not have the risk of liquidation in the short term, because the government's attitude towards Cathay Pacific is obviously "Too big to fail" (too big to fail), under any circumstances, Cathay Pacific will be avoided, and it is expected that Cathay Pacific can "long-term debt, long-life repayment" If the aviation industry is normalized and the oil price is at a low level, after the stock price is repaired, you can raise funds and repay debts through different instruments such as rights issues.
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Cathay Pacific's investment strategy for Liang Jiewen
