Wednesday, September 18, 2013
Foreigners Now Own More Than Half Of JAL
TOKYO (Nikkei)--Overseas investors have grown to a majority of the outstanding shares in Japan Airlines Co. (9201) nearly a year after its relisting, and the stock is flying high.
Direct foreign ownership stood at 50.05% of outstanding shares through Sept. 10, according to the Japan Securities Depository Center. JAL touched a new high of 5,750 yen on Tuesday before closing at 5,710 yen, up 1% from Friday. The stock has soared 49% since Sept. 19 of last year, the first trading day of the relisted shares, with overseas investors more than doubling their stake.
Several factors are at play. JAL has improved its financial health and profitability since filing for bankruptcy protection in 2010. It has canceled unprofitable routes, reduced its workforce, and lightened its depreciation burden though such moves as writing down aircraft. As a result, it boasts a return on equity of 36% for the year ended March 31.
"Many investors look at the investment indicators and see that JAL is undervalued," says Ryota Himeno of Barclays Securities Japan Ltd.
A change to the articles of incorporation was also significant. Starting this fiscal year, all overseas investors can receive dividends. Under the Aviation Law, foreign investors can hold no more than one-third of the voting rights in a Japanese airline. Without the change to the articles of incorporation, it was unclear whether dividends would be honored when foreign ownership in JAL exceeded that level.
Activist fund Jana Partners LLC is said to be among the owners, but a JAL executive says the airline has not received any particular demands from Jana at this time.
(The Nikkei, Sept. 18 morning edition)