UOBKayhian on 19 Feb 2014
FY14F PE (x): 30.6
FY15F PE (x): 28.2
2.2% rise in pax traffic; best load factor in four years... Traffic (RPK) growth outpaced capacity growth across all regions except for East Asia. SIA attributed the decline in loads in the region to capacity shift from Bangkok to other regional destinations. Still, loads were the strongest in four years, but this could partially be due to an earlier CNY. Still a valuation play. The stock has risen by 5% since we upgraded the stock and highlighted the deep value as well as the potential for incremental revenue from ancillary revenue. We maintain the view. We also would like to highlight that SIA’s fleet is implicitly valued at 0.48x book value, after deducting net cash and fair value of SIA Engineering. (SIAEC)
Maintain BUY. SIA trades at a P/B multiple of 0.67x ex SIAEC. We value SIA (ex- SIAEC) at 0.75x forward book and adjust for its fair value stake in SIAEC. Our target price of S$10.70 implies 0.97x FY14F P/B (at group level)
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