Maybank downgrades SIA to hold

Stock Name: SIA
Company Name: SINGAPORE AIRLINES LTD

Research House: Maybank Kim Eng

Price Call: HOLD

Target Price: 11.05

Maybank Kim Eng cut its rating on Singapore Airlines to hold from buy and expects the airline to report a weak quarterly results due to rising fuel prices.

The brokerage reduced SIA’s target price to $11.05 from $14.40. The airline’s shares were 0.3% lower at S$10.67, and have gained 5% so far this year versus a 12% rise in the main market.

SIA reports January-March results on May 9. Out of 23 analysts tracking SIA, only 6 have a buy rating, 13 have a hold and 4 have a sell recommendation.

“Concerns over jet fuel prices, together with lingering uncertainties in the global economy, in particular Europe, pose strong headwinds to SIA and the aviation sector as a whole,” Kim Eng said in a report.

It said although SIA’s passenger yields seem to be steadying, falling cargo yields could hurt its profitability.