SIA

SIA: Latest read through on latest stats. Parent co load factors climbed 2% pts yoy as traffic rose 4% in 2M13. Load factors across all route segments improved, with the exception of South-West Pacific region. Meanwhile, SilkAir’s loads deteriorated 4% pts in 2M12 as traffic growth of 9% was outstripped by a 15% rise in supply. Cargo traffic over Jan and Feb 2013 slipped 6% yoy against an 8% fall in capacity. CIMB note despite the continued improvements in traffic, SIA continues to report in its commentary that its efforts to boost loads are expected to place downward pressure on yields. Also, believe that the muted yield growth is partially a function of the persistently strong S$ against other currencies. In house view, air freight for SIA is likely to remain slow due to its heavy European exposure. Continue to prefer Cathay (Outperform, TP HK$17) to SIA due to the former’s greater reliance on traffic and revenues from North America. Believe that the market is suffering from less oversupply, while demand is likely to be more robust in light of the faster growth of those economies relative to Europe.