Singapore Airlines (SIA) reported a weak set of 4Q13 results as passenger yields remained depressed following weak demand for its services. Revenue fell 1.0% YoY to S$3.7b and operating loss widened to S$44.2m. On a full-year basis, revenue inched 1.6% higher but operating profit declined 19.8% to S$229.2m. Only with the gains from disposal of aircraft and parts did it manage to post an increase in PATMI for both the quarter (S$68.3m vs. –S$38.2m) and FY13 (S$378.9m vs. S$335.9m). Management declared a final dividend of 17 S cents, which brought the total dividends declared for FY13 to 23 cents (FY12: 20 cents). With the lacklustre results, continuing challenges ahead, and possible disappointment over the lack of a special dividend that some on the street had anticipated, we expect selling pressure on the counter, especially after it gained ~8% since mid-Apr. Based on a peg of 0.8x P/Book, we downgrade SIA to SELL with a fair value estimate of S$10.00 (S$10.85 previously).
4Q13 results fall short again
Singapore Airlines (SIA) reported a weak set of 4Q13 results as passenger yields remained depressed following weak demand for its services. Revenue fell 1.0% YoY to S$3.7b and operating loss widened to S$44.2m. On a full-year basis, revenue inched 1.6% higher but operating profit declined 19.8% to S$229.2m. Only with the gains from disposal of aircraft and parts did it manage to post an increase in PATMI for both the quarter (S$68.3m vs. –S$38.2m) and FY13 (S$378.9m vs. S$335.9m). Management declared a final dividend of 17 S cents, which brought the total dividends declared for FY13 to 23 cents (FY12: 20 cents).
More of the same for FY14
The operating environment in the coming months remains challenging for the group and we expect yields to stay depressed. As evidenced by their recent Apr operating statistics, passenger demand continues to deteriorate – across both the parent airline and SilkAir –and has outpaced cuts in capacity by management. The cargo segment is also likely to stay weak given the persistent weakness in global manufacturing activity and tepid consumer demand.
No clear catalysts for now
Aside from the extension of promotional fares, management has indicated plants to review its network and adjust capacity on weaker routes. The majority of the planned service adjustments focus on emerging market Asia in an effort to capitalise on the increasing affluence of the region. However, it is premature to speculate on the success of its new initiatives.
Market optimism pre-mature at this point
With the lacklustre results, continuing challenges ahead, and possible disappointment over the lack of a special dividend that some on the street had anticipated, we expect selling pressure on the counter, especially after it gained ~8% since mid-Apr. Based on a peg of 0.8x P/Book, we downgrade SIA to SELL with a fair value estimate of S$10.00 (S$10.85 previously).
No comments:
Post a Comment