China's Spring Air becomes Asia's most valuable budget carrier

Malaysian low-cost carrier AirAsia pushed to second spot

China's Spring Airlines Co Ltd has seen its share price more than double within just six days of listing on the Shanghai stock exchange, making it Asia's most valuable budget carrier.

Spring's shares gained the daily limit of 10% each day since hitting the debut maximum of 44% on Jan. 21. That made the airline worth 15.29 billion yuan ($2.45 billion), pushing Malaysian low-cost carrier (LCC) AirAsia Bhd into second place with a market capitalisation of $2.13 billion.

The shares - which halted Wednesday trade at 42.13 yuan ($7) shortly after market-open - are now more expensive than those of Air China Ltd, with a price-to-earnings ratio of 14.94 versus the flag carrier's 13.22.

"I am not that surprised by its share price performance as it's the only listed LCC" in China, said analyst Yu Nan at Haitong Securities. "A few other new listed companies were also popular in the first few days' trading."

Shares of other Shanghai-listed airlines were lower in afternoon trade on Wednesday in line with the broader market, with Air China down 2.4% at 8.7 yuan.

China Eastern Airlines Corp Ltd was 2.02% lower at 5.3 yuan and China Southern Airlines Co Ltd was down 1.9% at 5.17 yuan. The benchmark Shanghai Stock Exchange Composite Index was down 1.4%.

Spring has managed to undercut its larger state-owned rivals with stringent cost control and a no-frills approach.

"We are not that surprised (by the share price rise) because our financial figures are above the industry's average and our business model also helps," Spring Chief Financial Officer Chen Ke told Reuters.

Spring filled more planes more often last year than domestic rivals, reporting China's highest average passenger load factor of 95%. The airline has also been profitable since its first full year of operation in 2006.

With AirAsia, shares have been affected by the crash last month of an aircraft operated by an Indonesian affiliate. Low fares in its home market as well as over-capacity in Southeast Asia have also pulled down profit at airlines across the region.

($1 = 6.2444 Chinese yuan renminbi)