Singapore Airlines shares climb as earnings beat some analysts’ estimates

Singapore Changi Airport Terminal 4 departure boardSingapore Changi Airport Terminal 4 departure board

Singapore Airlines’ shares climbed on Friday after its fiscal full year earnings beat some analysts’ estimates, although others remained cautious.

The stock was up 3.41 percent at S$11.52 at 4:37 P.M. SGT on Friday, off an earlier high of S$11.56.

Singapore Airlines swung to a net profit of S$181.8 million for its fiscal fourth quarter, from a year-earlier loss of S$138.3 million. Revenue for the quarter was up 8.2 percent on-year at S$4.02 billion, the carrier said in a filing to SGX after the market close on Thursday.

For the full fiscal year, the company reported its net profit surged 148.1 percent on-year to S$893 million, while revenue was up 6.3 percent at S$15.81 billion.

‘Trounced’ forecasts?

UOB KayHian said the fourth-quarter results trounced its estimates. It had forecast full-year net profit of S$765 million and it added that the street had expected S$711 million.

“SIA reported vastly better earnings as it recognised profits from Krisflyer programme breakage and slot compensation,” it said in a note on Friday. “Still, even excluding these, core net profit more than doubled our forecast as passenger yield was 2 Singapore cents higher than our
estimate. Forward bookings were also exceptionally strong, rising 48 percent year-on-year, suggesting yields have improved.”

It kept a Buy call with S$11.90 target price and pointed to the carrier’s outlook.

“Improvement in passenger yields, forward bookings and SIA’s more optimistic take are key positives,” it said.

To be sure, not all analysts were positive on the results.

Not so positive?

Nomura said that full-year core earnings of S$601 million, up 183 percent on-year from the previous year’s low base, missed its estimate, making up only 91 percent of its forecast. It kept a Neutral call with S$9.90 target unchanged.

But it added, “given the results miss and the continuing intensity of competition combined with rising oil prices, there is a downside risk to our earnings forecast.”

OCBC also said in a note on Friday that core profit after tax and minority interests (PATMI) missed its forecasts, coming in at only 93 percent of its full-year estimate. It kept a Hold call, but put its S$10.85 fair value under review.

SilkAir

Another development that may have helped to support the share price on Friday was SIA’s separate announcement on Friday before the market open, that it planned a more than S$100 million investment program in regional unit SilkAir to upgrade its cabins, including installing seat-back in-flight entertainment systems in both business and economy classes.

Eventually, SilkAir will be merged into SIA after a sufficient number of the aircraft have been upgraded, it said, with the program expected to start in 2020.

Nomura called the segment a “laggard.”

An improved dividend may also help keep the stock buoyant.

The carrier recommended a final dividend of 30 Singapore cents a share for the full year, bringing the total dividend to 40 Singapore cents a share. That compared with a total dividend of 20 Singapore cents a share a year earlier.