SIA – Singapore Airlines (SINGF – Research Report), the Industrials sector company, was revisited by a Wall Street analyst yesterday. Analyst Roy Chen from UOB Kay Hian upgraded the rating on the stock to a Hold and gave it a S$6.80 price target.
Geoff Meacham has given his Hold rating due to a combination of factors. Firstly, Singapore Airlines’ (SIA) 2QFY24 net profit of S$707m exceeded expectations, which were set at S$420m-550m. This was mainly due to lower-than-anticipated operating costs, which in turn amplified the positive impact on earnings due to SIA’s high operating leverage. The airline’s net profit for the first half of FY24 reached a record level of S$1.44b, up 55% year-on-year.
Secondly, SIA’s 2QFY24 revenue of S$4.68b aligned with expectations, and despite a dip in non-fuel operating cost of 0.6% quarter-on-quarter to S$2.65b, the operating cost per Available-Tonne-Kilometre (ATK) fell by 6.1% quarter-on-quarter. Furthermore, the 2QFY24 fuel cost of S$1.23b was lower than the forecasted S$1.44b. The difference was likely due to significant fuel price fluctuations during the quarter and potentially some timing difference of the jet fuel price proxy used versus the actual average cost of jet fuel utilized by SIA during the quarter. These factors contributed to the Hold rating for SIA.
SINGF’s price has also changed slightly for the past six months – from $4.400 to $4.615, which is a 4.89% increase.
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SIA – Singapore Airlines (SINGF) Company Description:
Singapore Airlines Ltd. engages in passenger and cargo air transportation. It operates through the following segments: Singapore Airlines, SilkAir, Budget Aviation, SIAEC, and Others. The Singapore Airlines segment provides passenger air transportation under the Singapore Airlines brand with a focus on full-service passenger serving short and long haul markets. The SilkAir segment covers passenger air transportation under the SilkAir brand with a focus on full-service passenger serving regional markets. The Budget Aviation segment provides passenger air transportation under the Scoot brand with a focus on the lowcost passenger segment. The SIAEC segment provides airframe maintenance and overhaul services, line maintenance, technical ground handling services and fleet management. The company was founded on January 28, 1972 and is headquartered in Singapore.
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