SIA

SIA: CIMB is NETURAL (from underperform), with TP of $10.65. On its post-results, with 4QFY13 core net profit 35% below CIMB's projections, with FY13 earnings 10% under its full-year forecast. The group reported a disappointing operating loss in the period owing to soft passenger and cargo yields. DPS of 23¢ was also lower than estimated. Despite SIA’s legendary brand equity, CIMB think a structural re-rating is unlikely due to competition from Middle Eastern and budget carriers. The disappointment in group's quarter results stemmed mostly from poor yields, which fell by 4%, 1% and 6% at the mainline, SilkAir and SIA Cargo respectively. SIA continues to see challenges ahead. It highlights in its results release that forward passenger bookings are flat yoy, while yields are likely to remain subdued due to S$ appreciation and the weak economy. Cargo will continue to be a soft spot.