SIA

SIA: As Singapore-based carriers embarked on aggressive fleet expansion in recent years, SIA’s profitability had been considerably pressured. The good news is Singapore-based carriers are keenly aware of the supply glut and are taking steps to scale back their expansions plans. Qantas will pause its Jetstar Asia fleet growth plans, while Tigerair S’pore’s decision to cancel 9 aircraft due for delivery in 2014/15 should reduce capacity growth by 3.5%. Maybank KE forecasts sustained EPS growth over the next 3 years at 51% CAGR, and expects the stock to rally off its depressed valuations. Downside risk is limited given its near trough current valuations and SIA”s solid net cash position ($3.50/share). Maybank KE upgrades to Buy with higher TP of $12.00 from $10.00