SIA

SIA: CLSA maintains O/p with $12.15 TP. House note that SIA maintained control of capacity and continued to see higher load factors as consumers responded to discounted ticket prices, particularly on long haul routes to Europe. The Sep-Quarter traffic growth of 6.5% is ahead of house forecasts of 3.2%, while forecast yield decline of 6.8% results in a QoQ decline of 4.6% which maybe too pessimistic given the seasonal strength. These two factors should help to offset higher oil prices that remain sticky at an average of US$126.4 very forecast of US$117.5. Add that the market conditions are still challenging but at least SIA is maintaining high load factors for passengers even if pricing has taken a hit. Looking ahead, CX’s comment about declining YoY passenger capacity from now into 2013 is positive for the industry, unfortunately it remains unique with others still adding capacity from existing order books.