China's Spring Air be­comes Asia's most valu­able bud­get car­rier

The Financial Daily - - INTERNATIONAL -

BEI­JING: China's Spring Air­lines Co Ltd has seen its share price more than dou­ble within just six days of list­ing on the Shang­hai stock ex­change, mak­ing it Asia's most valu­able bud­get car­rier.

Spring's shares gained the daily limit of 10 per­cent each day since hit­ting the de­but max­i­mum of 44 per­cent on Jan. 21. That made the air­line worth 15.29 bil­lion yuan ($2.45 bil­lion), push­ing Malaysian low-cost car­rier (LCC) AirAsia Bhd into sec­ond place with a mar­ket cap­i­tal­i­sa­tion of $2.13 bil­lion.

The shares - which halt- ed Wed­nes­day trade at 42.13 yuan ($7) shortly af­ter mar­ket-open - are now more ex­pen­sive than those of Air China Ltd, with a price-to-earn­ings ra­tio of 14.94 ver­sus the flag car­rier's 13.22.

"I am not that sur­prised by its share price per­for­mance as it's the only listed LCC" in China, said an­a­lyst Yu Nan at Haitong Se­cu­ri­ties. "A few other new listed com­pa­nies were also pop­u­lar in the first few days' trad­ing."

Shares of other Shang­hai-listed air­lines were lower in af­ter­noon trade on Wed­nes­day in line with the broader mar­ket, with Air China down 2.4 per­cent at 8.7 yuan.

China Eastern Air­lines Corp Ltd was 2.02 per­cent lower at 5.3 yuan and China South­ern Air­lines Co Ltd was down 1.9 per­cent at 5.17 yuan. The bench­mark Shang­hai Stock Ex­change Com­pos­ite In­dex was down 1.4 per­cent.

Spring has man­aged to un­der­cut its larger sta­te­owned ri­vals with strin­gent cost con­trol and a no- frills ap­proach.

"We are not that sur­prised (by the share price rise) be­cause our fi­nan­cial fig­ures are above the in­dus­try's av­er­age and our busi­ness model also helps," Spring Chief Fi­nan­cial Of­fi­cer Chen Ke told Reuters.

Spring filled more planes more of­ten last year than do­mes­tic ri­vals, re­port­ing China's high­est av­er­age pas­sen­ger load fac­tor of 95 per­cent. The air­line has also been prof­itable since its first full year of op­er­a­tion in 2006.

With AirAsia, shares have been af­fected by the crash last month of an air­craft op­er­ated by an In­done­sian af­fil­i­ate. Low fares in its home mar­ket as well as over-ca­pac­ity in South­east Asia have also pulled down profit at air­lines across the re­gion.-Reuters

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