Following Singapore Airline’s upbeat July operating statistics, Maybank Kim Eng has upgraded the stock to “buy” from “hold”, on a firmer view that a better second half is shaping up.
For July, SIA maintained its capacity. However, traffic grew by 3.5% y-o-y and the load factor was up 2.8 points to 84.1%. “This is the best July load factor since 2007,” states Maybank Kim Eng, in its Aug 18 report.
The airline is believed to have improved its load factor by sacrificing its yield. This is a strategy indicated by the company management at its recent results briefing. “But we take respite that this strategy is successfully gathering higher traffic flow and that SIA products are always desirable if the price is right.”
The stock is now trading at a “very attractive” price to book value of 0.89 times, below the long-term mean of 0.97 times. The target price of $11.85, based on one times FY17 price to book value, remains unchanged.
“We think such valuations are not justified for a company that will deliver good earnings growth and strong cash flows going forward,” states Maybank Kim Eng.
“We upgrade the stock to ‘buy’ as the recent share price decline and cheap valuation has raised the stock’s appeal,” the brokerage adds.
As at 10.11am, SIA was down three cents to $10.13
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For July, SIA maintained its capacity. However, traffic grew by 3.5% y-o-y and the load factor was up 2.8 points to 84.1%. “This is the best July load factor since 2007,” states Maybank Kim Eng, in its Aug 18 report.
The airline is believed to have improved its load factor by sacrificing its yield. This is a strategy indicated by the company management at its recent results briefing. “But we take respite that this strategy is successfully gathering higher traffic flow and that SIA products are always desirable if the price is right.”
The stock is now trading at a “very attractive” price to book value of 0.89 times, below the long-term mean of 0.97 times. The target price of $11.85, based on one times FY17 price to book value, remains unchanged.
“We think such valuations are not justified for a company that will deliver good earnings growth and strong cash flows going forward,” states Maybank Kim Eng.
“We upgrade the stock to ‘buy’ as the recent share price decline and cheap valuation has raised the stock’s appeal,” the brokerage adds.
As at 10.11am, SIA was down three cents to $10.13
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
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