China Eastern Airlines (CEA) – Bear of the Day

To shore up its balance sheet, China
Eastern (CEA) announced the sale of up to RMB1.35 billion new A shares
and 490 million new Hong Kong dollar-denominated H shares to parent,
China Eastern Air Holding Co.

We continue to believe the fundamental
outlook for airline carriers remains weak and a CEA/SAL tie-up will not change
this. Both CEA and SAL shares are subject to special treatment, meaning that
daily share price movements are limited to 5% on the Shanghai Stock
Exchange.

Moreover, the shares could be delisted should CEA and SAL
continue to sustain losses in 2009. We reiterate our Underperform recommendation on China Eastern shares.Zacks Investment Research