Singapore Airlines

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Hi ghchua,

Those are very good points you have made there on the 6% being only at maturity (and currently at 4% p.a) as well as framing it in terms of a bond option / selling a put.

Considering that the MCB 2020 actually dipped to a 0.85 SGD price a few months after being issued (though it has recovered to SGD 1.01 now), my guess is that the MCB 2021 will fare worse.

I was/am a bit puzzled though, as to why Temasek agreed to back stop this, since it does not even seem like a good investment rationale for an ordinary investor (I have thought about it for two weeks plus wondering what is it that Temasek sees in this investment which I am missing out on and so far cannot come up with anything).
Disclaimer :-

I am not an investment professional.

I encourage you to do your own independent "due diligence" on any idea that I write about, because I could be and probably am wrong.

Nothing written here is an invitation to buy or sell any particular stock.

At most, I am handing out an educated guess as to what the markets may do.

The market will always find a new way to make a fool out of me (and maybe, even you!).

Even the best strategies of the past fail, sometimes spectacularly, when you least expect it.

I am not immune to that, so please understand that any past success of mine will probably be followed by failures
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Rainbow 
SQ@505

I thought it's quite straight forward.
https://www.singaporeair.com/saar5/pdf/I...rs2020.pdf

a) Pg 11, Para 3.8
Shareholding Limits. The Constitution of the Company currently prescribes a limit of 5% (the “Prescribed Limit”) of the issued Shares (excluding treasury shares) in which any single Shareholder or related groups of Shareholders (other than Temasek Holdings (Private) Limited (“Temasek”) and/or such other person or persons with the approval of the Directors) may have an interest.

b) Pg 14, Para 3.10
Listing Status of the Shares. The Listing Manual requires a listed company to ensure that at least 10% of the equity securities (excluding treasury shares, preference shares and convertible equity securities) must be held by public shareholders. As at the Latest Practicable Date, Temasek, a substantial Shareholder of the Company, had a direct and deemed interest in approximately 55.75% of the issued Shares.

I had double checked the MCB allocation result for 2020 and 2021.  Indeed, % wise, they are similar.  In particular, I'm rather surprised by the similar % of excess right subscriptions.  That to me would be a interesting point to dig and learn something new.

Temasek backing up the MCB is quite easy to understand.
But, excess right subscribed by non-Temasek shareholder (similar ratio in 2020 and 2021) will be mind boggling.  Tongue

I hope those who applied for the excess rights could shed some light.
or anyone has an opinion?

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Stay home and stay safe, everyone.
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(19-06-2021, 11:50 PM)Shrivathsa Wrote: Considering that the MCB 2020 actually dipped to a 0.85 SGD price a few months after being issued (though it has recovered to SGD 1.01 now), my guess is that the MCB 2021 will fare worse.

I think if you look at 2020 MCB that is trading at $1.01 currently with a maturity principal amount of $1.80611, as compared to 2021 MCB with maturity principal amount of $1.69797, just by taking a ratio of $1.69797/$1.80611 multiply by $1.01 = 95cts. Of course, this is assuming that 2020 MCB and 2021 MCB are exactly the same as they both have the same conversion price and maturity date. But practically, the market might trade differently. I think 85cts might be too low a price for 2021 MCB, considering 2020 MCB is trading at $1.01. 95cts might be a good estimate though. This is because SIA share price had recovered as compared to few months ago and those MCB should be more valuable now.

(19-06-2021, 11:50 PM)Shrivathsa Wrote: I was/am a bit puzzled though, as to why Temasek agreed to back stop this, since it does not even seem like a good investment rationale for an ordinary investor (I have thought about it for two weeks plus wondering what is it that Temasek sees in this investment which I am missing out on and so far cannot come up with anything).

Temasek is a controlling shareholder for SIA. Therefore, their consideration might not be the same as ordinary retail investors out there. I could not speak for Temasek though, but there might be strategic reasons for them to invest in MCB, other than for investment only.
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(20-06-2021, 07:33 PM)ghchua Wrote:
(19-06-2021, 11:50 PM)Shrivathsa Wrote: Considering that the MCB 2020 actually dipped to a 0.85 SGD price a few months after being issued (though it has recovered to SGD 1.01 now), my guess is that the MCB 2021 will fare worse.

I think if you look at 2020 MCB that is trading at $1.01 currently with a maturity principal amount of $1.80611, as compared to 2021 MCB with maturity principal amount of $1.69797, just by taking a ratio of $1.69797/$1.80611 multiply by $1.01 = 95cts. Of course, this is assuming that 2020 MCB and 2021 MCB are exactly the same as they both have the same conversion price and maturity date. But practically, the market might trade differently. I think 85cts might be too low a price for 2021 MCB, considering 2020 MCB is trading at $1.01. 95cts might be a good estimate though. This is because SIA share price had recovered as compared to few months ago and those MCB should be more valuable now.

(19-06-2021, 11:50 PM)Shrivathsa Wrote: I was/am a bit puzzled though, as to why Temasek agreed to back stop this, since it does not even seem like a good investment rationale for an ordinary investor (I have thought about it for two weeks plus wondering what is it that Temasek sees in this investment which I am missing out on and so far cannot come up with anything).

Temasek is a controlling shareholder for SIA. Therefore, their consideration might not be the same as ordinary retail investors out there. I could not speak for Temasek though, but there might be strategic reasons for them to invest in MCB, other than for investment only.

National Service....
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Rainbow 
SQ@504
FY2021 Annual Report
https://links.sgx.com/FileOpen/SIA%20AR2...eID=673976

[Image: uc?id=1-9OMJEICzJPRyYLnHPAq4DnO9yyzsp43]

Stay home and stay safe, everyone.
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Rainbow 
SQ@489
Jun 2021 operating result - Passenger capacity @ 28%
https://links.sgx.com/FileOpen/opstats-j...eID=674861
[Image: uc?id=1nw2rMLFkWMWwyVgvSLft4939zDaC_y6Y]
Stay home and stay safe, everyone.
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