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SINGAPORE – Shares of Singapore Airlines (SIA) tumbled on Friday after state investment company Temasek sold a stake in the airline.
SIA’s top investor is selling around $400 million worth of shares, or a 1.85 per cent stake, in the national carrier, Reuters first reported on Wednesday.
The shares are priced between $7.202 and $7.283 apiece, representing a 3.97 per cent and 2.89 per cent discount respectively to the last close of $7.50 on the Singapore Exchange on Wednesday, according to a term sheet seen by Reuters.
“As an active investor, we regularly reshape and rebalance our portfolio to deliver sustainable returns over the long term,” Ms Juliet Teo, Temasek’s head of transportation and logistics, said in an e-mailed statement to The Straits Times
“We are committed to the long-term success of SIA and continue to maintain a majority stake in it,” she added.
Temasek will retain a 53.5 per cent stake in SIA following the sale.
Shares of SIA were the most heavily traded on the Singapore Exchange on Friday, with more than 85.4 million shares changing hands.
The shares closed Friday at $7.15 apiece, down 4.67 per cent.
SIA shares had rallied 35.6 per cent in 2023 as at Wednesday, before the sale was reported. The stock hit a high of $7.91 on June 15, its highest level in over five years.
The carrier in May reported its highest-ever annual net profit of $2.16 billion for the year ended March as travel rebounded. This came after it had booked three consecutive years of losses during Covid-19.
It rewarded its chief executive Goh Choon Phong with a remuneration package totalling $6.7 million for the same financial year, an increase of 86 per cent compared with the year before.
Eligible employees received a profit sharing bonus of 6.65 months and a maximum total of 1½ months of ex-gratia bonus.
In a report last week, analysts at DBS noted that while the national carrier has done better than global airline stocks and other aviation-related counters listed in Singapore, it could be time for investors to take profit on SIA.
While the airline should continue to benefit from high travel demand, the analysts believe its earnings may have reached a peak as competition among global carriers intensifies and cargo rates come under pressure.
In addition, they warned that earnings could take a hit after its acquisition of a stake in Air India is complete.
DBS has downgraded its recommendation on SIA from a buy to a hold, and values the stock at $6.80.
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