SIA

SIA: Counter has outperformed MSCI Singapore Index by 9.0ppts year to date. Morgan Stanley thinks that the outperformance will continue, driven by fuel cost savings, capacity discipline and rational competition in the region. MS expects operating margins to expand from c.3.9% in FY2015 to c.15.5% in FY2016 and net profit to grow from c.$411m to c.$2.1b. Assuming SIA is able to maintain its 60% payout ratio, we are likely to see a potential dividend yield of 8.2% at current price levels. House maintains OVERWEIGHT with TP of $16.43.