Company Name: SINGAPORE AIRLINES LTD
| Research House: Maybank Kim Eng | Price Call: HOLD | Target Price: 10.32 |
Maybank Kim Eng cut its target price on Singapore Airlines to $10.32 from S$11.15 and maintained its ’hold’ rating, after the carrier reported a 54% fall in second-quarter net profit and warned of a challenging outlook.
SIA shares were down 0.2% at $10.45. The stock has gained 2.9% so far this year, lagging the 14% gain in the broader Straits Times Index.
SIA earned a net profit of $90 million in the three months ended September, down from $194 million a year earlier, as both passenger and cargo yields fell.
For the six months ended September, SIA’s cargo business reported a larger operating loss of $99 million, more than three times the $31 million loss a year earlier.
Maybank said although SIA’s decision to remove one of its 13 freighters from service from January 2013 to May 2014 was a step to stem the bleeding from its cargo segment, the unit was still likely to be a source of weakness in the near term.
The broker added promotional fares to stimulate passenger demand would continue to depress yields and jet fuel prices remained at elevated levels.
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