Brokers' take

Singapore Airlines | Hold Target price: S$10.36 Feb 9 close: S$9.94 OCBC Investment Research, Feb 9

Singapore Airlines' 3QFY17 revenue declined 2.5 per cent yoy to S$3.84 billion on lower passenger flown revenue as passenger yields declined across all SIA portfolio airlines. SIA Cargo's 3QFY17 was exceptional as it achieved S$53 million in operating profit - its best third quarter in nine years. While SIA recorded a S$79 million write-down over its Tigerair brand and trademark, we strip out this one-off and coupled with a 17.6 per cent y-o-y fall in 3QFY17 fuel expenses, 3QFY17 core PATMI grew 20.3 per cent to S$256.2 million.

For 9MFY17, core PATMI grew 20.0 per cent yoy to S$378.5 million, and formed 85.3 per cent of our FY17 forecast, as fuel costs fell 22.8 per cent mainly driven by lower hedging losses (ie rolling-off of expensive hedges).