The stock advanced to 16.1 yuan Wednesday, compared with the 11.18 yuan price in its initial public offering, and stayed at that price throughout the day. The share sale raised 760 million yuan ($122 million) for the Shanghai-based carrier, only the second airline to list in China since 2002.
Juneyao Air's sale is part of an IPO boom as the Shanghai Composite Index has more than doubled in the past year, but it's just the second Chinese airline to complete an IPO in China since 2002. Low-cost carrier Spring Airlines Co. has surged more than 600 percent since its January listing as China encourages private entrepreneurship in an air-travel market set to become the world's largest over the next two decades.
"Juneyao Air will likely match Spring Air's big surge," said Cao Xuefeng, a strategist with Huaxi Securities Co. in Chengdu. "New listings are very popular with investors and gains would continue even if the bull market cools off a bit."
Juneyao Air, whose Chinese name means lucky, will use proceeds from the share sale to buy more planes, adding to the 42 Airbus Group NV narrow-body jets it currently uses to connect Shanghai to Beijing, Hong Kong and Macau, among other destinations.
The carrier was profitable in each of the past four years. Net income gained 26 percent to 428 million yuan last year. Guotai Junan Securities Co Ltd. underwrote the share sale offer, according to the prospectus.
Flop IPOs
Still, seven of the 11 airline IPOs in Asia over the past five years now trade below their sale prices, data compiled by Bloomberg show. Bangkok Airways Co. has fallen 15 percent since its $622 million IPO in October, while AirAsia X Bhd., the long-haul budget carrier backed by Tony Fernandes, has lost nearly three-quarters of its value since it debuted in July 2013, according to the data.
Spring Air, which listed in January after a $291 million IPO, is the best performer, the data show.
Juneyao Air gets its name from its parent company, Juneyao Group. Both were named after the oldest of the three Wang brothers, who were born in a village near the eastern Chinese city of Wenzhou.
The Wang family will retain a 79 percent stake in Juneyao Air -- worth five billion yuan at the offer price -- after the IPO. The three children of the deceased Wang brother will own 30 percent, with his oldest son owning the largest single stake of 1.69 billion yuan, or 27 percent.
Source: Bloomberg News
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