What’s new: Shares of Eastern Air Logistics Co. Ltd., the air freight subsidiary of China Eastern Airlines Group, jumped 44% Wednesday on their debut 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 cap of 36.05 billion yuan. Eastern Air Logistics’ initial public offering raised 2.4 billion yuan ($375 million) through the sale of 158.8 million shares.
The logistics unit was spun off in 2017 from China Eastern Airlines Corp. Ltd. (600115.SH), the publicly traded unit of state-owned China Eastern Airlines Group. As a result of a mixed-ownership restructuring, the state-owned parent sold 55% of Eastern Air Logistics shares to Legend Holdings, parent of computer maker Lenovo, and five other investors.
The background: China has been revamping its three largest state-owned air freight carriers through mixed-ownership reorganizations in an effort to improve their financial performance and take on international giants like FedEx and DHL.
Following Eastern Air Logistics’ listing, China Southern Airlines’ spinoff freight unit and Air China Cargo Co. Ltd., which was a unit of Air China until 2018, are also seeking flotations.
After the restructuring, Eastern Air Logistics’ profitability improved significantly. Its net profit tripled last year to 2.36 billion yuan while revenue rose 34% to 15.11 billion yuan.
Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bobsimison@caixin.com)
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