Hot stock: Singapore Airlines drops after Q1 results miss expectations

SHARES of Singapore Airlines fell 5 per cent on Friday in the wake of first-quarter results that fell short of analysts' expectations.

The counter fell steadily after opening at S$10.46 on Friday morning and was down 5.3 per cent or 57 Singapore cents to S$10.23 at 3.06pm, with some 5.1 million shares changing hands.

The national airline had reported after trading hours on Thursday that net profit for the three months ended June 30 fell 58.6 per cent to S$139.6 million, weighed by a nearly 40 per cent increase in its average jet fuel price.

OCBC Investment Research maintained a "hold" rating on the stock, with a fair value estimate of S$11.01, down from S$11.30 previously, noting that passenger traffic is expected to grow in coming months, though competition in key operating markets persists and cost pressures remain.

UOB Kay Hian also maintained its "hold" recommendation and had its target price of S$11.90 under review. The firm said that SIA's core net profit growth, which excludes exceptional items, exceeded its expectations, but that was mostly due to accounting changes. UOB Kay Hian also noted higher-than-expected cargo yields of 9.9 per cent, versus its 5.5 per cent estimate, and a surprise 22 per cent year-on-year decline in aircraft leasing cost.