As travel recovery continues, Singapore Airlines (SIA) C6L 0.00%   has again reported better earnings. For its 3QFY2023, the airline reported earnings of $628 million, up 12.7% y-o-y. Revenue in the same period was up 8% to $4.85 billion.

 

For the nine months ended Dec 2022, the airline reported earnings of $1.56 billion, versus a loss of $752 million. Revenue, meanwhile, reached $13.26 billion, up 157.9% y-o-y.

 

The airline has been steadily reinstating popular routes to China and India, as well as increasing frequency to the likes of Hong Kong, Seoul, Taipei and various other points in Japan.

 

As of Dec 31 2022, SIA as a group covered 111 passenger destinations in 36 countries, while its cargo network covers 116 destinations in 38 countries.

 

As China reopens, SIA is trying to resume its services. It now flies to 14 destinations in China, some way to go before reaching 25 points covered before the pandemic.

 

In its earnings commentary, SIA expects demand for air travel to be robust in its 4Q ended March, with support from higher traffic within East Asia.

 

&ldquo Forward sales remain strong across all markets for both leisure and business travel, as well as all cabin classes. The Group will continue to monitor the demand for air travel, and adjust its capacity accordingly,&rdquo says SIA.

 

However, the airline warns that air freight will likely face &ldquo headwinds&rdquo this current quarter not only because of seasonal factors but also because of broader macroeconomic concerns.

 

&ldquo The airline industry continues to face geopolitical challenges, slowing economic growth, high cost inflation, and elevated fuel prices. Competition is likely to intensify as airlines inject more capacity on international routes,&rdquo SIA warns.

 

SINGAPORE Airlines : C6L -1.36% (SIA) and Scoot flew a combined 2.6 million passengers in January, as demand was boosted by the year-end peak return traffic and the Chinese New Year holiday season.

 

This represented a four-fold increase year on year, although January&rsquo s passenger capacity was down 2.7 per cent month on month, SIA noted in a bourse filing on Wednesday (Feb 15).

 

In January, SIA said it continued to see strong passenger traffic and load factors across all route regions, including East Asia. During the month, the airline resumed services to Guangzhou, China, while Scoot resumed services to Balikpapan, Indonesia.

 

Group passenger capacity in January remained at 80 per cent of pre-Covid-19 levels, similar to December 2022.

 

The group&rsquo s passenger load factor (PLF) in January came in at 86.9 per cent, down 2.8 percentage points from its peak in December. Year on year, PLF rose by 46.9 percentage points.

 

SIA posted a monthly PLF of 85.9 per cent, and Scoot, 90.4 per cent.

 

The group&rsquo s cargo operations registered a load factor of 51.8 per cent, down 24.2 percentage points year on year.

 

SIA noted that loads declined 24.8 per cent on year due to weaker cargo demand capacity, on the other hand, rose by 10.2 per cent on year as increased passenger services resulted in higher belly-hold capacity.

 

At the end of January, the group&rsquo s passenger network covered 112 destinations in 36 countries and territories, with SIA serving 77 destinations and Scoot, 58. Its cargo network comprised 117 destinations in 38 countries and territories.

 

SINGAPORE Airlines (SIA)&lsquo s : C6L +1.03% valuation does not adequately reflect its brighter earnings prospects, said DBS Group Research on Friday (Jan 20).

 

&ldquo We believe that its relatively promising recovery trajectory and medium-term outlook justify a multiple that is at least on par with its peers,&rdquo the research team added. 

 

The national carrier is currently priced at a discount to its regional peers. It&rsquo s priced at 4.7 times FY2024 enterprise value/Ebitda (earnings before interest, taxes, depreciation and amortisation), which is 0.5 standard deviation below its five-year average prior to the pandemic.

 

The research team raised SIA&rsquo s target price to S$6.80 from S$6.60, implying a potential upside of 16.2 per cent from the counter&rsquo s last trading price of S$5.85 as at 10.53 am on Friday. Shares of SIA were trading S$0.03 or 0.5 per cent higher at the time. It maintains its &ldquo buy&rdquo call on the stock. 

 

DBS anticipates passenger traffic to normalise at a quicker pace on China&rsquo s earlier-than-anticipated reopening. The greater China market accounted for some 15 per cent of total passenger revenue pre-Covid.

 

Passenger volumes are expected to reach pre-pandemic levels in the third quarter instead of Q4 as previously estimated. DBS projected the recovery in volumes to lift SIA&rsquo s FY2024 and FY2025 net profit by 11 per cent and 8 per cent, respectively. 

 

The analysts further highlighted that the recovery in passenger revenue will mitigate the adverse impacts on SIA&rsquo s cargo segment.

 

DBS&rsquo views contrasted with CGS-CIMB&rsquo s, which downgraded SIA to &ldquo hold&rdquo from &ldquo add&rdquo on Jan 16 as the brokerage no longer viewed the airline&rsquo s upside as compelling despite its strong dividends.

 

The recent rerating in SIA&rsquo s share price also reached a level which is no longer above CGS-CIMB&rsquo s 10 per cent threshold for an &ldquo add&rdquo recommendation. Its target price on the counter remained unchanged at S$5.97. 

SINGAPORE - A combined 2.7 million passengers flew on Singapore Airlines (SIA) and Scoot in December, marking an 11.7 per cent month-on-month increase.

 

Group passenger traffic and load factors remained robust across all route regions including East Asia, said SIA Group in a bourse filing on Monday (Jan 16).

 

In Hong Kong, Japan and Taiwan, the demand for air travel was boosted by the relaxation of travel restrictions.

 

Group passenger capacity was 6.9 per cent higher in December compared to the prior month, reaching 80 per cent of pre-Covid levels.

 

The group recorded its highest monthly passenger load factor (PLF) in December, with PLF coming in 3.8 percentage points higher month on month at 89.7 per cent. Year on year, PLF improved by 43.2 percentage points.

 

SIA and Scoot posted record monthly PLFs of 89.1 per cent and 91.6 per cent, respectively.

 

The group, however, experienced weaker cargo demand. Cargo operations had a load factor of 54.3 per cent, 24.5 percentage points lower year on year.

 

Loads fell by 18.9 per cent from the year before, while capacity expanded by 17.7 per cent as increased passenger services resulted in higher bellyhold capacity.

 

Scoot resumed flights to Zhengzhou in December, while SIA restarted fortnightly passenger services from Singapore to Beijing on Dec 30.

 

SIA Group&rsquo s passenger network covered 111 destinations in 36 countries and territories as at end-December. SIA served 76 destinations, while Scoot served 57 destinations.

 

The cargo network comprised 116 destinations in 38 countries and territories. 

 

CGS-CIMB has downgraded its call on Singapore Airlines : C6L -0.51% (SIA) to &ldquo hold&rdquo from &ldquo add&rdquo as the brokerage no longer views the national carrier&rsquo s upside as compelling despite its strong dividends.

 

In a report on Monday (Jan 16), analyst Raymond Yap noted that SIA&rsquo s share price has rerated 16.5 per cent over the past three months on optimism over China&rsquo s reopening.

 

He added that despite SIA&rsquo s share price rally over the past week, as well as expectations of the company to deliver a &ldquo decent&rdquo return of 6.5 per cent, its current level is no longer above CGS-CIMB&rsquo s 10 per cent threshold for an &ldquo add&rdquo recommendation. 

 

The brokerage&rsquo s price target on the stock remains unchanged at S$5.97. 

 

Yap suggested that investors lighten their positions on the mainboard-listed airline, especially should the share price run up further in anticipation of strong Q3 FY2023 results, considering the likelihood of high passenger airline demand and moderation in jet fuel prices.

 

The analyst projected SIA&rsquo s earnings to normalise post-pandemic, and added that he deems the target price-to-book value ratio (P/BV) of 0.9 times &ldquo appropriate&rdquo . This has been SIA&rsquo s mean P/BV since 2011. 

 

Ahead of SIA&rsquo s Q3 FY2023 earnings announcement, Yap also raised revenue passenger kilometres demand forecast by 4 per cent. 

 

He noted that CGS-CIMB&rsquo s previous expectations are likely to be exceeded due to both higher-than-expected available seat kilometres capacity and passenger load factor, based on SIA&rsquo s operating statistics in October and November 2022.

 

The brokerage has also slashed all-in jet fuel price assumptions for FY2023 to FY2025 due to lower Brent crude oil price assumptions and lower jet-fuel-to Brent crack spread assumptions.

 

In the light of a likely global slowdown which could also impact cargo yields, Yap is also expecting the airline to experience lower revenue tonne kilometre demand as well as reduced cargo yield. 

 

At the same time, the analyst sees China&rsquo s reopening as a &ldquo double-edged sword&rdquo for SIA. 

 

While the national carrier and its sister airline Scoot stand to benefit from a recovery in inbound and outbound passenger flows, Yap said growing competition with Chinese and Hong Kong carriers may force SIA to give up its unsustainably fat yield premiums.

 

&ldquo Upside risks include potential for the Chinese passenger traffic recovery to exceed expectations due to a tsunami of revenge travel,&rdquo he added.