DBS Group Research’s Paul Yong has kept his “buy” and $6.60 target price on Singapore Airlines, following the flag carrier’s update that it achieved record high passenger load factor of 89.7% in December.
In contrast, the corresponding number for December 2021 was 46.5%.
The higher-than-expected numbers reflects “the sustained momentum in travel demand and the resilience of consumer spending, hence yields could come in stronger than anticipated,” says Yong on Jan 17.
The increase was especially pronounced for routes to East Asia, with the key markets of Hong Kong, Japan and Taiwan dropping most restrictions.
“China’s reopening should provide the next leg of growth for the region, although we only anticipate a sharp rebound in 2Q23,” adds Yong.
CGS-CIMB Research’s Raymond Yap is less bullish, as he downgraded SIA from “add” to “hold” following the recent run, on news of China’s re-opening. His target price of $5.97, pegged to price to book value ratio of 0.9x, remains.
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Over this coming year, Yap expects SIA to deliver total returns of 6.5%, comprising his target price of $5.97 and estimated dividend payments of 27 cents.
“While this return is decent, it is no longer above our 10% threshold for an ‘add’ recommendation. Consequently, we downgrade to ‘hold’ and recommend investors to lighten their positions on SIA,” says Yap.
As at 11.29 am, SIA shares traded at $5.81, down 0.34%; but up 13.7% over the past year.
