What's new: We expect SIA to report a marginal EPS of S$0.02 (down 93%), for F1Q09 on July 30. Our almost breakeven operating profit of S$8 mn is based on a passenger yield decline of 9%. If passenger yield were to decline by more than 10%, we believe that we could see an operating loss for F1Q09, which would likely negatively surprise the market, potentially triggering profit taking on the stock after the result.
SATS Distribution & Timetable: Potential dividend in specie of S$1.66 (based on SATS share price of S$2.28); AGM (July 31), Ex-Dividend date (Aug 13); Dividend Distribution (Aug 28). We view the sharp rise in SATS share (up more than 50% since the May 15 announcement) as a key support for SIA’s share price near-term.
Investment thesis: Our price target of S$9.30 is based on 0.8x our F2009e BV. Upside risks to our target include: 1) a positive earnings surprise due to potential fuel hedging gains or marginal decline in premium and leisure yields. 2) Industry consolidation that would increase market share for the remaining airline players and lead to stability in pricing power.
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1 comment:
Now that SIA is ex SATS rights don't ustand its price still $12 plus? Wud exp it to drop about $2 to discount for the SATS rights and thus bring price closer to your target price. Wud appre any comments
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