SIA

SIA: Morgan Stanley maintains E/w on stocks with $13.60 TP. Quick comment: House view SIA shares as a defensive airline proxy play for exposure in the Apac airline sector and would accumulate SIA shares at $10-11 level and be a seller at the $13 level for the next 6-9 mths to lock in potential trading gains.

Add that since Aug1, SIA has bought back 4.6m shares at an average price of $11.71, and number of treasury shares has risen to 4.8m. Estimate about 18-19m share options could be exercised and SIA would need to buy another 13-14m shares within the next 6-9 mths. Believe share buybacks imply SIA mgt views current valuation as attractive, although stock lacks near-term catalysts for a re-rating.

Valuations undemanding at just under prospective P/B of 1x, and above bear case valuation of $10.10. TP of $13.60 is based on P/B of 1.2x, and the share buyback programs could support SIA shares at above bear case.