- RE-ITERATE BUY Entry 5.28 – Target – 5.50 Stop Loss – 5.17
- The Singapore Airlines Group has over 20 subsidiaries, covering a range of airline-related services, from cargo to engine overhaul. Its subsidiaries also include SIA Engineering Company, Scoot, Tiger Airways, Singapore Flying College and Tradewinds Tours and Travel. Principal activities of the Group consist of air transportation, engineering services and other airline related activities.
- Post-Covid boom. In 2022, according to statistics collated by Singapore Tourism Board, there has been an exponential increase in visitor arrivals since the reopening of our borders to vaccinated travellers without quarantine in April. Between January and August this year, there were a total of about 2.96 million visitors, a Y-o-Y increase of 1,833% as compared to the same period in 2021. In August alone, Singapore welcomed approximately 729 thousand visitors. However, visitor growth can be seen slowing as there was only a slight increase of 2000 visitors, from July to August.
- Tailwinds. Since the gradual reopening of borders globally, travel has resumed. Singapore Airlines Limited has benefited from this with growth in passenger traffic. It more than doubled its monthly available seat kilometres and boosted the number of passengers it flew by more than ten-fold. With both business and leisure travellers increasing, the airline will have to manage resources and manning shortages well.
- Travel growth. Aviation will continue to recover as we see more borders opening up and people take advantage of their freedom to travel. Additionally, with the upcoming events to be held in Singapore and the year-end holiday season coming up, we expect travel demand to remain robust for the rest of the year.
- 1Q23 results review. In1Q23 (YE March), net profit arrived at S$370 million, recovering from a S$409 million loss during the same period in 2021. This was a result of the sharp revival in travel demand after economies reopened their borders. Additionally, their operating statistics showed significant month-on-month passenger traffic growth since April, with August seeing a tapered increase.
- Updated market consensus of the EPS in FY23/24 is S$0.333/S$0.365 respectively, which translates to 16.1x/14.6x forward PE. Bloomberg consensus average 12-month target price is S$5.86.
(Source: Bloomberg)