SIA

SIA: Deutsche updates that the recently proposed Indian JV with Tata Sons to set up a full service airline based in New Delhi is promising, but short term earnings challenges remain. Downward passenger yield pressures remain and SIA has not seen any significant pickup in the cargo business. Deutsche thinks it makes sense for SIA to try to expand into that market given longer term growth potential of the main SIA carrier is only 4 – 6% p.a. However, the house cautions on regulatory approval which may take months, and fuel taxes and airport bottlenecks which is the norm for the Indian market. Maintains Sell with TP: $8.80.