Brokers' take

Singapore Aviation

UOB Kay Hian, Jan 6

Strategy - buy SATS and Singapore Airlines (SIA) on weakness. SATS remains our top pick within the Singapore aviation space and we expect the stock to generate 17 per cent returns (net of dividend) for 2016. Catalysts are improved earnings from subsidiary TFK, cost savings as well as incentives from Changi Airport. We also favour SIA on expectations of lower fuel hedging losses and stable yields. SIA is expected to generate 13 per cent returns for 2016 (inclusive of dividend). We would be buyers of SIA near S$10.80. Meanwhile, SIA Engineering Company remains the top sell within the sector. While its stock price is supported by a stock buyback, we expect the stock to underperform.