China Southern Air Cargo Considers Hong Kong IPO: Report
China Southern Air Holding is reportedly exploring a potential initial public offering for China Southern Air Cargo on the Hong Kong Stock Exchange (HKEX), according to a Bloomberg report. The IPO could raise hundreds of millions of dollars, but discussions remain at an early stage. The move follows the company’s withdrawal of a previous listing application on the Shanghai Stock Exchange earlier this year.
China Southern Air Cargo, also known as China Southern Airlines Logistics, pulled its Shanghai IPO bid in February due to market conditions and capital requirements, according to its majority shareholder, China Southern Airlines. However, Chinese regulations prohibit A-share listed companies, like China Southern Airlines, from spinning off subsidiaries unless they have posted profits for at least three consecutive years. With losses recorded in fiscal years 2022, 2023, and projected for 2024, China Southern Airlines does not meet this requirement.
The shift in focus to Hong Kong comes as U.S.-China trade tensions continue to impact market dynamics. HKEX typically mandates consistent profitability for new listings, requiring companies to report at least HKD35 million (USD4.5 million) in profit for the most recent year and cumulative profits of HKD45 million (USD5.8 million) over the past two years. However, companies failing to meet these thresholds can still list if they satisfy alternative criteria, such as market capitalization, revenue, or cash flow.
The potential Hong Kong listing could provide China Southern Air Cargo with the capital needed for expansion amid ongoing global trade and logistics shifts.
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Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com