1QFY23 results met expectations
<Results Analysis>: 1QFY23 results met expectations
- 1QFY23 net profit came in at S$12.8m (+33.3% q-o-q, -11.7% y-o-y), accounting for 18.4% for our full-year projection, which is largely in-line with our expectation given that we expect SIE’s recovery to be more pronounced in 2HFY23.
- 1QFY23 revenue amounted to S$171.5m (+5.4% q-o-q, +36.9% y-o-y), representing 22.5% of our full-year estimate.
- Share of profits from associates and JVs was at S$16.4m in 1QFY23, slightly above the S$12-15m run rate in previous quarters.
- Maintain HOLD with unchanged TP of S$2.65
Our thoughts:
- Core net profit (excluding government support) amounted to S$4.2m in 1QFY23, a slight improvement from the previous quarters.
- Operating losses narrowed sequentially to S$4.0m in 1QFY23 from S$7.3m in 4QFY22. Excluding government grants (which will end in July-22), total group expenditure rose only by 19.3% y-o-y, considerably lower than the increase in revenue.
- The turnaround in SIE’s core operations is largely within expectations – the number of flights handled in Singapore reached 55% of pre-pandemic levels in June-22, up from 38% in March-22.
- Meanwhile, the number of base maintenance checks also saw an improvement as airlines returned more passenger aircraft into service, and demand for SIE’s fleet management services also saw solid traction in tandem with increased flight activity in the region.
- Recovery should gain more momentum in the near-term as more countries globally, and regionally make further progress on reopening. We expect key customer SIA’s passenger capacity to reach 75-80% of pre-COVID19 levels by end-2022.
- We could turn positive on the counter if SIE embarks on earnings-accretive M&A, or if we see signs that air traffic in the region will rebound ahead of our current expectations.
