SIA

Singapore Airlines (SIA): UOB Kay Hian maintains a Buy at S$16.04 upon expectations on net profit rising 46% qoq for 2QFY11. SIA is expected to achieve S$369m in net profit for 2QFY11 compared to S$253m in 1QFY11. Key factors are:
a) higher pax load factor of 80.3% vs 78.4%
(+1.9ppt qoq, +0.7ppt yoy),
b) lower fuel cost and efficiency from the A380s and
c) higher passenger yields…

UOB analysts expects SIA to benefit from the 2% qoq appreciation of the Sgd and lower jet fuel prices -3.4%. SIA expected to post operating profits in passenger and cargo operations of S$285m (+110% qoq) and S$53m (-11% qoq). The Sgd is expected to appreciate more and SIA to benefit from lower fuel costs….

…Yields are expected to rise on increased fares, which are typically raised in 4QFY10. A 1.7% qoq rise in yields for 2QFY11 have been priced in on this assumption. Higher traffic growth is slated to come from increased flight frequencies by 40% to US and Seoul in Oct and to Japan and Middle East in Nov…

…Downside risks include high jet prices and increased competition from Middle Eastern and low cost carriers