SIA

SIA: negative surprise in 4QFY11 results. The Street was largely caught off-guard by the net loss of $38m, driven by a 3.3% yoy decline in passenger yield and a 16.7% yoy rise in fuel costs. There was also an exceptional $51m loss on disposal of its B747 aircraft. Further disappointment in dividends. Co declared final div of 10cts, bringing full year div to 20cts (translates to 1.9% yield). SIA distributed $1.40/sh in FY11, which included special div of 80cts/sh. Going forward, mgt thinks that promotional activities necessitated by intense competition will continue to place downward pressure on yields, and as demand in Europe and the US continue to be impacted by an anaemic economic outlook. Notes cargo yields are expected to remain stagnant in the next qtr, with a gradual cargo recovery only expected in 2H. Deutsche keeps at Hold with TP $10.80. Says even though SIA is trading below book value, it sees no need to Buy the stock, as continued weak qtrly results will hurt sentiment on the stock. UOBK downgrades to Sell, cuts TP to $9 from $11.90, on the back of reduced FY13-14E net profit estimates. JPM however has an Overweight rating with TP $14, premised on a gradually improving outlook, vs valuations at 0.9x P/B and ~7% long term yield.