Eastern Air Logistics shares rise 44% when debut in Shanghai
What’s up: Actions of Eastern Air Logistics Co. Ltd., the air freight subsidiary of the China Eastern Airlines group, jumped 44% on Wednesday when it debuted on the Shanghai Stock Exchange.
The stock closed at 22.71 yuan ($ 3.56), up from the initial public offering price of 15.77 yuan, resulting in a market capitalization of 36.05 billion yuan. Eastern Air Logistics’ initial public offering raised 2.4 billion yuan ($ 375 million) from the sale of 158.8 million shares.
The logistics unit was derived in 2017 from China Eastern Airlines Corp. Ltd. (600115.SH), the publicly traded unit of the state-owned China Eastern Airlines Group. Following a mixed-ownership restructuring, the state-owned parent company sold 55% of Eastern Air Logistics shares to Legend Holdings, parent company of computer maker Lenovo, and five other investors.
The background: China has reorganized its three largest state-owned air cargo carriers through mixed-ownership reorganizations in an effort to improve their financial performance and take on international giants like FedEx and DHL.
Following the listing of Eastern Air Logistics, the derivative cargo unit of China Southern Airlines and Air China Cargo Co. Ltd., which was an Air China unit until 2018, are also while searching flotation.
After the restructuring, the profitability of Eastern Air Logistics improved considerably. Its net profit tripled last year to 2.36 billion yuan while revenue rose 34% to 15.11 billion yuan.
Quick Takes are condensed versions of stories related to China for quick news that you can use. To read the full story in Chinese, click here.
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