Recovery On Track, MCB Redemption A Priority
SIA’s bottom line is likely to see a substantial improvement in FY23, driven by the
expected progressive travel recovery and helped by a significant fuel hedging gain.
While we are optimistic that SIA’s business is due for a full recovery by FY25, we note
that its costly MCBs issued at the height of the pandemic have to be redeemed first
before the earnings recovery can deliver meaningful value accretion to shareholders.
Re-initiate coverage on SIA with HOLD and a FY25 DCF-based target price of S$4.80.