SIA

SIA: Annouced a decent set of October operating numbers, although there is not much to cheer about. Passenger traffic still managed to post marginal growth of 0.7% yoy, but the pace has slowed. Passenger load factor has also declined yoy and mom.

With mgt’s comments just 2 wks ago that advance passenger bookings are showing signs of weakness, growth may come off further in the next one to two mths, which could resul in flat growth or even a yoy decline. SIA’s cargo demand fell 2% yoy, better than most of its peers, and rebounded sequentially on seasonal strength. Load factor of 66% is at longterm average.

Credit Suisse note that with 30% of grp’s mkt cap in net cash, SIA’s forward P/B of 1.0x and EV/EBITDA of 4.4x are not excessive. That said house is concerned about the weaker macroeconomic environment, the intense competition in SG hub and the uncertainty regarding the viability of its new low-cost airline. Ratings are as per follow:

CS maintains Neutral with $11.00 TP,
Citi maintains Sell with $10.40 TP.