Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

Just over a year ago, nearer the start of the impact of covid-19 on the global airline industry, Singapore Airlines also known as "<a href="https://www.smartkarma.com/entities/singapore-airlines-ltd" target="_blank" data-smartkarma-citation="entities:74:1" rel="noopener">SIA (SIA SP)</a>" announced a pair of rights offerings meant to shore up its capital base, and to allow it to survive through the pandemic. The rights offerings required a Circular, and a shareholder meeting to approve them, then Singapore Air raised S$5.3bn in New Shares and S$3.5bn in Mandatory Convertible Bonds (MCBs). The shareholder meeting of summer 2020 also allowed for Singapore Air to raise up to S$6.2bn of Additional Rights MCBs within 15 months of the original shareholder meeting. Last week on Wednesday night, Singapore Air <a href="https://links.sgx.com/FileOpen/Launch%20Announcement%202021.ashx?App=Announcement&amp;FileID=667006" target="_blank" rel="noopener">announced</a> the launch of a renounceable rights offering for S$6.2bn of Mandatory Convertible Bonds, following on from last year. The <a href="https://links.sgx.com/FileOpen/Notice%20of%20Record%20Date%20.ashx?App=Announcement&amp;FileID=667008" target="_blank" rel="noopener">record date</a> will be 28 May 2021.The company also announced <a href="https://links.sgx.com/FileOpen/slide-q4fy2021.ashx?App=Announcement&amp;FileID=667066" target="_blank" rel="noopener">results</a>, with a full-year net loss of S$4.3bn after passenger traffic is down 97.9%, including S$1.953bn in impairment charges. Non-fuel expenditures dropped by more than half, but that was still not enough to overcome the severe drop in flight mile revenues (-76.1%; -94.7% for passenger flights)), despite a significant increase (+38.8%yoy) in cargo revenues.The company ended the year with S$7.8bn in cash and bank balances against S$14.3bn of debt. NAV per share was S$5.36/share vs S$7.86 a year earlier on 31 March 2020.None of this should be a surprise. That Singapore Airlines had raised S$15.4bn since April 2020 (S$8.8bn in rights issues, S$2.1bn in secured financing, S$2.5bn in convertible bonds ($850mm 1.625% in Dec 2020), notes, and credit lines, S$2.1bn of secured financing against aircraft, and earlier this month a S$2.0bn sale and leaseback of 11 aircraft), lost S$2.5bn this year on an operating basis, and in February the company <a href="https://links.sgx.com/FileOpen/NE-0621%20.ashx?App=Announcement&amp;FileID=647770" target="_blank" rel="noopener">deferred S$4bn</a>of aircraft delivery over the next four fiscal years) and lowered non-fuel expenditures by S$5bn annually should be a positive outcome.But another S$6.2bn of MCBs is not bullish. Just as the first S$8.8bn was not bullish last year. More below the fold.

Just over a year ago, nearer the start of the impact of covid-19 on the global airline industry, Singapore Airlines also known as "SIA (SIA SP)" announced a pair of rights offerings meant to shore up its capital base, and to allow it to survive through the pandemic. The rights offerings required a Circular, and a shareholder meeting to approve them, then Singapore Air raised S$5.3bn in New Shares and S$3.5bn in Mandatory Convertible Bonds (MCBs). The shareholder meeting of summer 2020 also allowed for Singapore Air to raise up to S$6.2bn of Additional Rights MCBs within 15 months of the original shareholder meeting. Last week on Wednesday night, Singapore Air announced the launch of a renounceable rights offering for S$6.2bn of Mandatory Convertible Bonds, following on from last year. The record date will be 28 May 2021.The company also announced results, with a full-year net loss of S$4.3bn after passenger traffic is down 97.9%, including S$1.953bn in impairment charges. Non-fuel expenditures dropped by more than half, but that was still not enough to overcome the severe drop in flight mile revenues (-76.1%; -94.7% for passenger flights)), despite a significant increase (+38.8%yoy) in cargo revenues.The company ended the year with S$7.8bn in cash and bank balances against S$14.3bn of debt. NAV per share was S$5.36/share vs S$7.86 a year earlier on 31 March 2020.None of this should be a surprise. That Singapore Airlines had raised S$15.4bn since April 2020 (S$8.8bn in rights issues, S$2.1bn in secured financing, S$2.5bn in convertible bonds ($850mm 1.625% in Dec 2020), notes, and credit lines, S$2.1bn of secured financing against aircraft, and earlier this month a S$2.0bn sale and leaseback of 11 aircraft), lost S$2.5bn this year on an operating basis, and in February the company deferred S$4bnof aircraft delivery over the next four fiscal years) and lowered non-fuel expenditures by S$5bn annually should be a positive outcome.But another S$6.2bn of MCBs is not bullish. Just as the first S$8.8bn was not bullish last year. More below the fold. 

Singapore Air Rights MCBs - S$6.2bn of Capital Suck

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

Thematic (Sector/Industry)

For investors who are not based in Singapore, the mini lockdown in Singapore has started again due to the sudden increase in the number of community cases which previously was relatively under control. Before one thinks that it is a too-harsh of a policy, the rate of the increase of unlinked community cases in Singapore is high. This matters a lot because every Singapore residents need to check in every establishment using either an Identification card, Trace Together app, or token which has proved to be very effective as for months, most of the COVID-19 cases can be traced and therefore allows the government to take the necessary actions. 
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This time is different. Alongside the third wave that has hit India and Thailand, Singapore, too, is hit. The Singapore government's response to this is very much like the first lock-down (Circuit Breaker), that they minimize public interactions so that the number of community cases does not increase and provide them with the time to perform contact tracing thoroughly. 
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In this report, we identify that <a href="https://www.smartkarma.com/entities/sheng-siong-group-ltd" target="_blank" data-smartkarma-citation="entities:6824:1" rel="noopener">Sheng Siong (SSG SP)</a> , <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> and <a href="https://www.smartkarma.com/entities/singapore-post-ltd" target="_blank" data-smartkarma-citation="entities:150:1" rel="noopener">Singapore Post (SPOST SP)</a>as winners while <a href="https://www.smartkarma.com/entities/comfortdelgro-corp-ltd" target="_blank" data-smartkarma-citation="entities:497:1" rel="noopener">Comfortdelgro Corp (CD SP)</a> and <a href="https://www.smartkarma.com/entities/genting-singapore-ltd" target="_blank" data-smartkarma-citation="entities:439:1" rel="noopener">Genting Singapore (GENS SP)</a>as losers.

For investors who are not based in Singapore, the mini lockdown in Singapore has started again due to the sudden increase in the number of community cases which previously was relatively under control. Before one thinks that it is a too-harsh of a policy, the rate of the increase of unlinked community cases in Singapore is high. This matters a lot because every Singapore residents need to check in every establishment using either an Identification card, Trace Together app, or token which has proved to be very effective as for months, most of the COVID-19 cases can be traced and therefore allows the government to take the necessary actions. 

This time is different. Alongside the third wave that has hit India and Thailand, Singapore, too, is hit. The Singapore government's response to this is very much like the first lock-down (Circuit Breaker), that they minimize public interactions so that the number of community cases does not increase and provide them with the time to perform contact tracing thoroughly. 

In this report, we identify that Sheng Siong (SSG SP) , Sea Ltd (SE US) and Singapore Post (SPOST SP)as winners while Comfortdelgro Corp (CD SP) and Genting Singapore (GENS SP)as losers. 

Singapore Mini Lockdown: Winners and Losers

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

InterGlobe Aviation Ltd / Equity Capital Markets

Interglobe Aviation (Indigo)’s board approved a fund raising of around US$400m (INR30,000m) on 10th May 2021. This is the second time over the past year that the company has obtained a board approval for undertaking a fund raising. The previous instance was in Aug 2020, when the board approved a fundraising of up to INR40,000m. However, the quicker than expected recovery since then meant that the company never raised the funds and in Jan 2021, its CFO stated that it had no intention of doing so either.However, the brutal COVID-19 second wave in India probably led to a change of heart. In this note, we will talk about the deal dynamics.

Interglobe Aviation (Indigo)’s board approved a fund raising of around US$400m (INR30,000m) on 10th May 2021. This is the second time over the past year that the company has obtained a board approval for undertaking a fund raising. The previous instance was in Aug 2020, when the board approved a fundraising of up to INR40,000m. However, the quicker than expected recovery since then meant that the company never raised the funds and in Jan 2021, its CFO stated that it had no intention of doing so either.However, the brutal COVID-19 second wave in India probably led to a change of heart. In this note, we will talk about the deal dynamics. 

Interglobe Aviation (Indigo) QIP Early Look - Headwinds Lead to a Change of Heart

A closer look at each of the Air Travel Pass requirements reveals that the residents from the above countries are not required to do Stay Home Notice/quarantine for 14 days anymore. Historically, tourists from China are the biggest constituents of the total number of tourists in Singapore. The fact that China has already been included in the Travel Bubble is good news for ComfortDelgro as there will be more ridership in Singapore's taxi and public transport. 
Launch of lifestyle app (Zig), functionality improvement such as adding more destination in a single journey, increasing its online presence through Lazada is some of the initiatives that ComfortDelgro's management has initiated in a bid to win more market share in the taxi business. This will result in both an increase in revenue and a blended margin.

A closer look at each of the Air Travel Pass requirements reveals that the residents from the above countries are not required to do Stay Home Notice/quarantine for 14 days anymore. Historically, tourists from China are the biggest constituents of the total number of tourists in Singapore. The fact that China has already been included in the Travel Bubble is good news for ComfortDelgro as there will be more ridership in Singapore's taxi and public transport. 
Launch of lifestyle app (Zig), functionality improvement such as adding more destination in a single journey, increasing its online presence through Lazada is some of the initiatives that ComfortDelgro's management has initiated in a bid to win more market share in the taxi business. This will result in both an increase in revenue and a blended margin. 

High Conviction Ideas 2021 Update: Travel Bubble, Taxi

One of the many reasons why drivers were lured to join <a href="https://www.smartkarma.com/entities/grabtaxi-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab (0967655D SP)</a> and <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> is that the app provides content that leads to a higher daily order. Grab went on to become a super App, offering a wide range of services from transport, food delivery to finance including insurance. <a href="https://www.smartkarma.com/entities/uber-technologies-inc" target="_blank" data-smartkarma-citation="entities:430:1" rel="noopener">Uber (UBER US)</a> , a listed peer for <a href="https://www.smartkarma.com/entities/grabtaxi-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab (0967655D SP)</a> and <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> is currently trading at 8.69x PBR, 500% higher than <a href="https://www.smartkarma.com/entities/comfortdelgro-corp-ltd" target="_blank" data-smartkarma-citation="entities:497:1" rel="noopener">Comfortdelgro Corp (CD SP)</a> at 1.5x PBR. The taxi business contribution to the group's revenue has been reduced to 13-14% to the group's revenue due to the stiff competition from Grab and Gojek as well as from the pandemic.Long being dubbed as the proxy to  Singapore's tourism and residents' transport provider stock, the foray into the EV charging station and Smart and Intelligent Mobility Technologies could shift the market's opinion to Autonomous and Electric Vehicle and the stock may trade at a higher multiple.

One of the many reasons why drivers were lured to join Grab (0967655D SP) and Gojek (1379371D IJ) is that the app provides content that leads to a higher daily order. Grab went on to become a super App, offering a wide range of services from transport, food delivery to finance including insurance. Uber (UBER US) , a listed peer for Grab (0967655D SP) and Gojek (1379371D IJ) is currently trading at 8.69x PBR, 500% higher than Comfortdelgro Corp (CD SP) at 1.5x PBR. The taxi business contribution to the group's revenue has been reduced to 13-14% to the group's revenue due to the stiff competition from Grab and Gojek as well as from the pandemic.Long being dubbed as the proxy to  Singapore's tourism and residents' transport provider stock, the foray into the EV charging station and Smart and Intelligent Mobility Technologies could shift the market's opinion to Autonomous and Electric Vehicle and the stock may trade at a higher multiple. 

Comfort Delgro (CD): Zig and EV Charging Station

Singapore

Singapore Airlines Limited provides air transportation, engineering, pilot training, air charter, and tour wholesaling services. The Company's airline operation covers Asia, Europe, the Americas, South West Pacific, and Africa.

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Singapore Airlines (SIA SP)

Singapore Air Rights MCBs - S$6.2bn of Capital Suck

Singapore Air issued S$8.8bn of shares and Mandatory Convertible Bonds last year, with a management option to issue another S$6.2bn of MCBs. They...

Travis Lundy

Singapore Mini Lockdown: Winners and Losers

In this report, we identify that Sheng Siong (SSG SP) , Sea Ltd (SE US) and Singapore Post (SPOST SP)as winners while Comfortdelgro Corp (CD SP)...

Henry Soediarko

Interglobe Aviation (Indigo) QIP Early Look - Headwinds Lead to a Change of Heart

Interglobe Aviation (Indigo)’s board approved a fund raising of around US$400m on 10th May 2021. This is the second time over the past year that...

Sumeet Singh

High Conviction Ideas 2021 Update: Travel Bubble, Taxi

Zig, adding more destinations in a single journey, cooperation with Lazada are some initiatives that ComfortDelgro's management has initiated in a...

Henry Soediarko

Comfort Delgro (CD): Zig and EV Charging Station

Dubbed as the proxy to Singapore's tourism and residents' transport provider stock, the foray into the EV charging station and Smart and...

Henry Soediarko

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