SIA

SIA: DBSV projects SIA would consume over 48m bbls of jet fuel/year. With jet fuel a US$75/bbl vs US$120m/bbl in Aug, the group will reap substantial benefits from lower fuel costs. Upside will not be immediately apparent as US$ has strengthened against the S$ since Aug, and SIA has hedged over 60% of its fuel requirements until Mar’15 and US$116/bbl FY16e is earnings is projected to be lifted by 30%. Assuming jet fuel price of US$95/bbl. Cost savings will be partially offset by stronger USD/SGD and lower yield assumptions. Balance sheet is expected to remain strong with net cash position of $4b. DBSV expects SIA to pay out at least 50¢ dps for FYmar16 given the improved profit outlook and strong balance sheet position. This is ~60% payout and a yield of 4.3%