[Analysis] SIA, Too big to Fail?
Struggling airlines have always been the target of bottom picking from Traders; simply because "It's cheap now!"
But is the risk worth it?
There is a saying in the stock market "Buy Low, Sell High".
Sadly though, the reality is usually "Buy high, sell higher" or "Buy low, sell lower"
We have seen from examples such as Sembcorp Marine that traders who chose to buy at $1.00 or even $0.500 because it is cheap, are facing rights issues and paper losses.
SIA is a national carrier. The government will not let it fall. But, they will only support it so much it keeps it alive. This means there is a high probability for future financing events such as more rights issues, new shares replacement, perpetual bonds, etc.
This would mean SIA is indeed too big to fail but, it will have a very very hard time seeing its glory days of 14/share ever again.
Too big to fail does not equate to higher share prices. In fact, it could continue to plunge in order to raise money to keep it alive.
Major resistance is at 7.00. We do not believe SIA will ever go back to pre-covid19 prices anytime in the next 5 years.
If you wish to have some stakes in SIA, you may do so in a safer way by proxy of STI ETF.
But is the risk worth it?
There is a saying in the stock market "Buy Low, Sell High".
Sadly though, the reality is usually "Buy high, sell higher" or "Buy low, sell lower"
We have seen from examples such as Sembcorp Marine that traders who chose to buy at $1.00 or even $0.500 because it is cheap, are facing rights issues and paper losses.
SIA is a national carrier. The government will not let it fall. But, they will only support it so much it keeps it alive. This means there is a high probability for future financing events such as more rights issues, new shares replacement, perpetual bonds, etc.
This would mean SIA is indeed too big to fail but, it will have a very very hard time seeing its glory days of 14/share ever again.
Too big to fail does not equate to higher share prices. In fact, it could continue to plunge in order to raise money to keep it alive.
Major resistance is at 7.00. We do not believe SIA will ever go back to pre-covid19 prices anytime in the next 5 years.
If you wish to have some stakes in SIA, you may do so in a safer way by proxy of STI ETF.
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