Fundamentally, there are a lot of concerns around Singapore Airlines. Even though the company has managed to reduce their cash burn to around S$100 million to S$150 million per month, there is still not much certainty on when, nor at what pace international routes will re-open.

The US and UK might at present be working towards some form of vaccinated-travel lanes for visitors later this year but details are presently scarce. There is also much concern around how their recently issued Mandatory Convertible Bonds (MCB) can significantly enlarge the current share count.

Many analysts have gone ahead to treat the MCB as outright equity issuance and hence are unable to ‘justify’ higher target prices.

Source: Bloomberg

ATEC gets it, BUT we like it.

We like the fact that the company has been able to exercise such cost discipline. This is the best form of self-help. We like that the MCBs are callable every six months and only convertible at the end of 10 years, for when the recovery does eventually arrive, the MCBs can be retired in step, and dilution reduced.

We like that the current surge in air-freight looks set to continue well into 2022, in large due to the impossible logjam at numerous seaports. We wonder, with the holiday season soon upon us, how much cargo we can potentially see diverted from sea to air given current rates, and how much SIA can benefit.

We like that with the current Germany-Singapore vaccinated travel lane setting precedence, it now becomes an easy protocol to replicate for other routes.

We like that the stock has been correcting a sideways channel, and no longer showing much downside pressure.

Again, all we have to do is to wait for the trigger-in signal.