In a report released today, Paul Chew from Phillip Securities downgraded SIA – Singapore Airlines (SINGF – Research Report) to a Sell, with a price target of S$6.08.
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Paul Chew has given his Sell rating due to a combination of factors affecting Singapore Airlines. Despite a record increase in passenger numbers, the company’s core profit after tax and minority interest (PATMI) saw a significant decline of 32.8% year-over-year, aligning with expectations but highlighting underlying challenges. The passenger load factor also decreased, indicating that capacity growth outpaced demand, while passenger yields fell due to heightened competition.
Additionally, while the proposed dividend payout ratio appears robust, future earnings are expected to be pressured by continued declines in yields, even though they remain above pre-pandemic levels. The recent share price performance has prompted a downgrade from a Neutral to a Reduce rating, despite an increase in the target price to S$6.08. Potential downside risks include a weakening cargo performance amid volatile U.S. tariff policies, which could further impact the company’s financial outlook.