SIA

SIA reported a 80% plunge in FY10 net profit to $216m with revenue -21% to $12.7bn. However, 4Q net profit of $278m (in line with mkt estimates of $240m), reversed 1H losses of $466m, helped by a 23% drop in fuel costs to $997m and 13% slide in staff costs to $495m. 4Q passenger yields were encouraging at 11.1¢/km vs 10.2¢/km in the 1st 9 mths while cargo yield jumped to 34.9¢/ltk in the 4Q from 31¢/ltk. SilkAir reported 4Q operating profit $31m vs $17m yoy; SIA Cargo $8m vs $123m loss yoy

The carrier is proposing final DPS of 12¢ representing 66% payout. Advance bookings for travel are encouraging especially in business class and the carrier is adding capacity across its network. The return of premium traffic will help SIA enhance yields at greater pace than some of its regional peers. Forward indicators suggest that the recent recovery in volumes of air cargo will hold up in the near term. At 1.25x P/B and 12x FY11 P/E, valuations are undemanding for earnings turnaround story