• Record half-year operating and net profits on the back of record load factors and robust travel demand
• Interim dividend of 10 Singapore cents per share announced
• Expect FY24 (financial year ending 31 Mar 2024) to be a bumper year, but normalisation lurks on the horizon
Singapore Airlines (SIA) reported a record performance for1HFY24, with net profit coming in at SGD1.44b, up 55.4% year-on-year (YoY) on the back of robust travel demand and SIA’s sustained lead in capacity post-reopening. Management has guided positively on air travel demand for the rest of FY24, which is expected to offset softer performance from the cargo business. While we expect SIA to continue to deliver excellent results for the rest of the year, we note that its operating environment is set to become more competitive, as regional airlines continue to return more international capacity to the market. A recessionary outlook also remains a key overhang on discretionary travel expenditure, while geopolitical tensions could pose further upside risks to oil prices and inflationary pressures. We make some adjustments to our forecasts and revise our fair value estimate to SGD7.29. SIA continues to have long-term value in investors’ portfolios, and current valuations are reasonable, in our view.