SIA - SIA target raised to $19.50 from $16.50 by UBS

Stock Name: SIA
Company Name: SINGAPORE AIRLINES LTD
Research House: UBS

UBS raises Singapore Airlines (C6L.SG) target price to $19.50 from $16.50 based on target P/BV of 1.57x, keeps Buy call.



Says SIA share price has underperformed Asian peers, +7% year-to-date vs +11%, +60% in MSCI AxJ Index, Cathay Pacific’s (0293.HK) share price, respectively.



Notes, stock trading at 10x FY12E EPS, 4x EV/EBITDA, 1.2x FY12E book value, discount to mid-cycle, peer valuations, and 5% dividend yield.

“SIA has been recovering at a slower pace in this cycle. This was likely due to its modest capacity growth and fleet reconfiguration, smaller exposure to north Asia, and competition from low cost and Gulf carriers. However, we think its business model remains solid and estimate 28% year-on-year growth in pre-ex EPS in FY12.”



Raises FY11/12/13 EPS forecasts 5%-20%, revises FY11 passenger, cargo yield assumptions upward, lowers FY11/12 operating cost estimates due to stronger SGD vs USD. Shares +0.1% at $15.56.