SIA

SIA: 2QFYMar11 results within expectations. $380m in net profit, a sharp turnaround from the $159m loss YoY, +50% QoQ. Improvement came mainly from from higher surplus from sale of aircraft and better than expected pax yields (S11.8cts, +0.9% QoQ)…

Mgt notes advanced booking demand is holding up, which should support a 5% increase in pax capacity in 2H; expects pax yields to remain steady. Thinks freight could level off for rest of the yr. But remains cautions on outlook for 2H, in view of volatility in fuel, FX...

Interim dividend of 20cts/sh, vs none earlier. Healthy net cash position of $4.5b points to an increasing chance of yr-end div surprise (up to $0.65/sh for FY10, which translates to 4% yield). Stock trades at 1.3x FY11E P/B, below historical avg of 1.5x, regional peers of 1.8x.
The majority of Street keeps Buy/ Outperform ratings post results.
Citi (TP $16 ), KE (TP $18.90 ), Macquarie (TP $19.50 ), Deutsche (TP $19.90 )…

Still news of carrier having to set aside €74.8m (S$134m) as provision for fine imposed by European Commission likely to cap any upside in the near term. Fine relates to EC's decision that SIA Cargo involved in conspiracy with other airlines to fix surcharges, rates in EU. Provision will be reflected in SIA's current FY, although carrier intends to appeal against decision. Immediate support at $16, which coincides with 5-d MA.