Brokers' take
Singapore Airlines | Hold Target price: S$10.40 Sept 18 close: S$9.50 UOB Kay Hian, Sept 18
We lower our fiscal 2019 net profit forecast by 12.3 per cent as we factor in an additional S$91 million in losses from 20 per cent-owned Virgin Australia (VAH), which declared an exceptional loss of S$632 million in FY18. SIA should recognise about S$137 million loss from VAH in Q2 FY19.
We also expect a weak second quarter next year due to a 42 per cent year-on-year increase in jet fuel costs. Barring a high-single-digit rise in pax yields and a reduction in non-fuel cost, SIA is likely to show a y-o-y decline in operating profit in Q2 FY18.
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