Analysts remain bearish on SIA after woeful Q4 losses

The national carrier also provided dismal operating update for April, while offering little earnings visibility for the year ahead

Published Fri, May 15, 2020 · 09:50 PM

Singapore Airlines

Singapore

ANALYSTS remain bearish on Singapore Airlines (SIA) after the national carrier delivered worse than expected losses in the March quarter and a dismal operating update for the month of April, while offering little earnings visibility for the year ahead.

In a note on Friday, Credit Suisse analysts Louis Chua and Shaun Tan maintained a "neutral" rating on SIA but cut their 12-month target price to S$3.35, pegged to 0.8 time its adjusted net asset value per share of S$4.19 for the year ending March 31, 2021.

"SIA highlighted there is no visibility on the timing or trajectory of the recovery, but does not assume to reach pre-Covid levels in the next one to 1.5 years," they wrote.

"Coupled with the recent rights issue fully underwritten by Temasek, we expect SIA to be able to continue operating as a going concern amid a high likelihood of industry consolidation. That said, with near-term losses and return on equity (ROE) expected to remain depressed in the foreseeable future (we estimate FY22-23 ROE of -2 per cent to 2 per cent), we believe a valuation discount remains w…