Analyst Jason Sum of DBS maintained a Hold rating on SIA – Singapore Airlines (SINGF – Research Report), reducing the price target to S$6.00.
Jason Sum has given his Hold rating due to a combination of factors affecting Singapore Airlines. Despite its strong market position and extensive network in Asia, the airline faces challenges with rising costs and pricing pressures, which are expected to continue to impact its operating margins and profitability in the near term. The company’s earnings have already peaked, and while they remain above pre-pandemic levels, they are projected to decline over the next few years.
Valuation-wise, Singapore Airlines’ stock appears to be fairly priced, aligning with the anticipated decline in core earnings before a potential recovery. Compared to regional peers offering a more attractive risk-to-reward profile, SIA’s valuation is seen as reasonable but not compelling enough for an upgrade. Additionally, the airline is constrained in its ability to counteract the ongoing cost and yield challenges, leading to a neutral stance on its stock with a revised target price of SGD6.00.
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SIA – Singapore Airlines (SINGF) Company Description:
Singapore Airlines Ltd. engages in passenger and cargo air transportation. It operates through the following segments: Singapore Airlines, SilkAir, Budget Aviation, SIAEC, and Others. The Singapore Airlines segment provides passenger air transportation under the Singapore Airlines brand with a focus on full-service passenger serving short and long haul markets. The SilkAir segment covers passenger air transportation under the SilkAir brand with a focus on full-service passenger serving regional markets. The Budget Aviation segment provides passenger air transportation under the Scoot brand with a focus on the lowcost passenger segment. The SIAEC segment provides airframe maintenance and overhaul services, line maintenance, technical ground handling services and fleet management. The company was founded on January 28, 1972 and is headquartered in Singapore.
