Singapore Airlines: Sell Rating Due to Declining PATMI and Overvaluation Amid Competitive Pressures

Analyst Paul Chew from Phillip Securities maintained a Sell rating on SIA – Singapore Airlines and decreased the price target to S$5.94 from S$6.08.

Paul Chew has given his Sell rating due to a combination of factors impacting Singapore Airlines’ financial performance. The airline’s profit after tax and minority interest (PATMI) has significantly declined, largely due to reduced interest income and substantial losses from associated companies like Air India. Despite an increase in passenger numbers and a slight improvement in passenger load factor, the yields have decreased due to heightened competition as more airlines increase their capacity on key routes.
Additionally, while there are some positive factors such as lower jet fuel costs and a depreciating USD, these are not enough to offset the challenges. The ongoing geopolitical tensions and rising costs continue to pressure passenger and cargo yields. The company’s current trading price is considered overvalued, with a price-to-book ratio higher than the estimated value for FY26. Upside risks include potential stronger-than-expected demand and improvements at Air India, but these are uncertain and do not currently justify a more favorable rating.