Singapore Airlines: SIA’s May pax load factor to Europe was the lowest in 6 years and came amid increased competition from Qatar Airways, which began operating the Airbus A350 aircraft out of SG on 11 May. By August, Qatar Airway’s total capacity out of SG will rise 67% and pose an even greater challenge to SIA’s biggest market – Europe.
UOB Kay Hian has cut their FY16 net profit forecast by 24%. The house maintains a HOLD rating with lower TP: $11.60 (prev: $12.40). Suggested entry level is $10.30, which is -1 s.d on P/B.
On the other hand, as SIA stock price has fallen to levels similar to those prevailing before jet fuel prices fell by 40%, Credit Suisse believes this represents a buying opportunity ahead of the 1QFY16 results. The house has upgraded its rating from NEUTRAL to OUTPERORM with TP: $12.95 (prev: $12.40). The lift reflects the revision in estimates, a weaker SGD and an improvement in listed investment values.
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