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Shares of TransAsia Airways jump on strategic investment hopes

Shares of TransAsia Airways jump on strategic investment hopes

Taipei, May 24 (CNA) Shares of TransAsia Airways, a mid-sized international carrier in Taiwan, rose sharply Friday morning on hopes that the airline will introduce a strategic investor through a stake disposal by one of its major shareholders, dealers said. In addition, with international crude oil prices on the decline, many investors expect lower operating costs in the air travel sector and an improvement in airlines' bottom line, dealers said. As of 11:25 a.m., shares of TransAsia had risen by the maximum daily 7 percent to NT$14.25 (US$0.48), with 1.45 million shares changing hands. The weighted index on the Taiwan Stock Exchange was up 0.02 percent at 8,239.58 points. Last week, China Development Industrial Bank filed an application with the TWSE to cut its holdings in TransAsia, but said it was in talks with a certain buyer. "So, there have been hopes that TransAsia will introduce a strategic investor to improve its operations and boost its profitability at a time when the global airline business is struggling in a slow economy," Grand Cathay Securities analyst Mars Hsu said. "As the broader market has gone into consolidation mode after yesterday's 1.91 percent plunge, investors are targeting stocks like TransAsia that have positive leads," Hsu said. In its application to the TWSE, China Development Industrial Bank said it is planning to sell 20 million TransAsia shares or about a 3.61 percent stake in the carrier. Currently, the bank owns a 13.4 percent stake in the airline. The shareholder said the disposal is simply part of its strategy to strengthen its financial structure. Since major local airlines, including TransAsia, reported a net loss for the first quarter of this year, the sector has been faced with downward pressure in recent sessions, according to Hsu. "TransAsia shares staged a strong technical rebound this morning on the back of the strategic alliance leads, which has left the first quarter losses behind for the moment," Hsu said. "Other airlines' stocks are also moving higher on bargain hunting buying." Shares of China Airlines had risen 2.58 percent to NT$11.95, while shares of EVA Airways had climbed 2.58 percent to NT$17.90. For the January-March period, TransAsia reported NT$0.23 in loss per share, while China Airlines and EVA Air posted NT$0.21 and NT$0.28 in loss per share, respectively. "The ugly first quarter results largely reflected weak global demand, which affected air cargo transportation," Hsu said. "But their bottom lines could improve on the back of stable international crude oil prices." West Texas Intermediate crude for July delivery fell US$0.03 to US$94.25 per barrel in New York overnight, while Brent crude for July contracts dropped US$0.16 to US$102.44 in London. (By Frances Huang)


Updated : 2021-05-10 11:52 GMT+08:00