SIA

SIA: SIA’s share price hits a new 52-week high of $10.70, partly inspired by a recent O/w rating from a foreign broker on the premise that higher-than-consensus yield growth could boost earnings over the next two years. We highlight SIA’s flat 4QFY14 revenue of $3.6b, with operating loss widening to $60.3m due to lower passenger (-1.8%) and cargo (-4.2%) carriage, and weaker yields (-0.7%). Loyal investors were however cheered by the group’s decision to declare dividends of 36¢ (11¢ final and 25¢ special), taking its full year pay-out to 46¢ (4.3% yield) In the near term, management remains concerned about competitive yield pressures on both passenger and cargo fronts, with fuel prices expected to remain elevated. With SIA currently trading at 0.95x P/B, we opine that downside could be limited based on its historical trough P/B of ~0.8x (post-GFC) and its solid net cash position of $3.9b. Yet continued operational weakness could place a damper on its ability to maintain its recent outperformance.