SIA - SIA kept at Overweight by HSBC; Sector top pick

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

HSBC says Singapore Airlines (C6L.SG) one of top picks among Asian conglomerates, transport stocks, as remains “positive on passenger driven airlines, hotels and conglomerates leveraged to Asian consumption.”

Rates SIA at Overweight with $19.00 target; “we forecast our Asian airline coverage will generate an aggregate 2010 recurring profit of US$6.8 billion ($8.9 billion), a sharp rebound from recurring losses in 2009. The earnings recovery has been driven by a strong pick-up in passenger and cargo demand which has boosted load factors and yields.”

Adds, while airline outlook remains good, tips 2011 profit growth will stall, largely as expects cargo profit to fall on year; but says SIA more passenger focused, has significant net cash balances, is best value Asian airline.



Notes, at target SIA would trade at 12x FY12E P/E, 1.4x P/BV, provide FY12E dividend yield of 5%; “compelling value.” Shares off 0.3% at $15.78.