Analyst Jason Sum from DBS maintained a Hold rating on SIA – Singapore Airlines and keeping the price target at S$6.50.
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Jason Sum has given his Hold rating due to a combination of factors impacting Singapore Airlines’ financial performance. Despite an improvement in operating profit and lower jet fuel costs, the airline’s net profit fell significantly short of expectations, primarily due to losses from its investment in Air India and reduced interest income. These factors have overshadowed the positive aspects of SIA’s performance, such as higher-than-expected passenger yields and load factors.
Additionally, the ongoing challenges in the cargo segment and the pressure on passenger yields due to intense competition and capacity growth contribute to a subdued profitability outlook. While the announcement of a special dividend package reflects the company’s commitment to shareholder returns and provides some support to the share price, the uncertainties surrounding Air India’s restructuring and the need for new capital injections pose risks to SIA’s earnings recovery in the near term.