Brokers' take

Singapore Airlines

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Close: S$11.24

Target price: S$13.00

CIMB Research | Feb 5

WHILE we had reflected lower fuel prices into our FY 2016 projections, we also factored in a low level of yields that the group passenger airlines managed to beat.

SIA acknowledged the tough realities, guiding for continuing "pressure on loads and yields". The poor oil industry outlook and investment bank retrenchments could impact business class travel demand in the immediate future.

At the same time, SIA's average cost of fuel hedges are falling quickly, as SIA mainly hedges jet fuel over a horizon of not more than 12 months. In the end, it is all about the tug-of-war between yields and costs, and SIA's Q3 results suggest that cost savings …