What’s new: One of Hainan Airlines Holding Co. Ltd.’s (600221.SH) key shareholders has boosted its stake in the Shanghai-listed carrier, helping drive up its share price, which has been hovering close to the level that would trigger a forced delisting.
American Aviation LDC. bought some 2.57 million B shares on Friday, according to a stock exchange filing on Monday. American Aviation acts in concert with Hainan Airlines’ controlling shareholder Hainan Hanwei Investment Co. Ltd., which owns 24.41% of the airline.
The purchase accounts for just 0.01% of the company’s total capital stock and would have been worth around $322,000 at the close of Friday’s share price. But it marks the start of a major capital injection, as American Aviation plans to buy between $5 million and $10 million worth of Hainan Airlines’ B shares within the next six months, the filing said.
The background: Hainan Airlines’ A shares and B shares both trade on Shanghai’s stock exchange, but its A shares are yuan-denominated while the latter are U.S. dollar-denominated.
If a stock’s closing price is below 1 yuan (14 U.S. cents) for 20 straight trading days, it will be delisted, according to Chinese securities regulations.
The price of Hainan Airlines’ A shares has declined for a month, dropping from 1.33 yuan apiece on June 3 to 1.02 yuan apiece on Friday. The price of its B shares fell by 21% in June.
News about American Aviation’s move drove the prices of Hainan Airlines’ A shares and B shares to surge by their daily limit to close at 1.12 yuan and $0.158, respectively, on Monday.
In the first quarter of this year, Hainan Airlines’ net profit attributable to shareholders more than quadrupled to 686.5 million yuan as revenue surged 33.5% to 17.6 billion yuan, according to company data.
Contact reporter Ding Yi (yiding@caixin.com) and editor Jonathan Breen (jonathanbreen@caixin.com)
