Stock Name: SIA
Company Name: SINGAPORE AIRLINES LTD
Research House: Kim Eng
Company Name: SINGAPORE AIRLINES LTD
Research House: Kim Eng
Kim Eng downgrades Singapore Airlines (C6L.SG) to Hold from Buy and cuts its target to $14.40 from $18.90, due to “a plateau in loads, as well as the potential economic fallout from the situation in Japan.”
Analyst Rohan Suppiah says while yields have been robust, “it's a matter of time before they will weaken.” He says SIA's February load factor was below expectations, down 4.8 ppts on-year at 75.1%, and while cargo had been surprisingly robust YTD, even this sector has shown signs of peaking.
Analyst Rohan Suppiah says while yields have been robust, “it's a matter of time before they will weaken.” He says SIA's February load factor was below expectations, down 4.8 ppts on-year at 75.1%, and while cargo had been surprisingly robust YTD, even this sector has shown signs of peaking.
He notes, fear of a nuclear fallout from quake-damaged Japan power plants will likely affect travel sentiment to Japan for at least several months. “Based on the run rate of loads and capacity for the 11 months to FY March 2011, and taking into account the above negative risk factors, SIA is unlikely to meet our original target assumptions.”
Kim Eng cuts its FY11 earnings forecast by 12%, FY12 by 19% and FY13 by 30%. Shares are off 1.2% at $13.04.
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