Previous day closing price: $10.44
Recommendation: Buy (maintained)
Target price: $14.40 (maintained)
SIA produced a solid set of results, under current circumstances. 3Q09 Net profit declined by 43% to S$337.2m, but was ahead of our and consensus expectation of around S$300m. Our variance came from higher than expected aircraft/spare parts sale.
We are maintaining our full year forecast of S$1,413.1m for FY09, (versus consensus of S$1.1bn) having assumed weaker load factors and yields, with SIA having already earned S$1,081.7m year to date. Our FY10 forecasts are also maintained at S$1,661.9m, up 18% vs FY09. This improvement will come mainly on the back of lower fuel prices, while still maintaining a muted outlook for yields and load factors. Our target price is maintained at S$14.40, based on 1.1x forward book value. Currently, SIA is trading at a 0.8x historical book value of S$12.26.
Source: Kim Eng, 11 Feb 2009
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