Singapore Airlines - CGS-CIMB Research 2022-02-17: Broad Quarantine-Free Travel Coming Up?

Singapore Airlines - Broad Quarantine-Free Travel Coming Up?

  • Reiterate ADD call on Singapore Airlines (SIA, SGX:C6L) as Singapore will reinstate full VTL capacity by 4 Mar, expand VTL lanes, and make it cheaper for travellers to enter Singapore.
  • The SIA group deployed:
    • 23% of its pre-COVID-19 passenger Available Seat Kilometre (ASK) capacity as at 31 March 2021,
    • 28% as at 30 June 2021,
    • 32% as at 30 September 2021,
    • 45% as at 31 December 2021, and
    • 46% as at 30 January 2022.
  • The SIA group’s ASK capacity in February 2022F could decline to 45% of pre-COVID-19 capacity given the suspension of additional VTL flight sales from 23 December 2021 to 20 January 2022 due to the emergence of the Omicron variant. However, we expect SIA group’s ASK capacity to rebound in March 2022F and beyond, as the Singapore government will progressively reinstate 100% of the VTL capacity.
  • The cargo business has continued to do very well in the October to December 2021 quarter (SIA’s 3QFY22F). In December 2021, cargo demand in Revenue Freight Tonne Kilometres (RFTK) terms rose to 1.2% above the pre-pandemic December 2019 level, which was a feat achieved despite Available Freight Tonne Kilometres (AFTK) capacity still 24.1% below the pre-pandemic level.
  • For FY22F, we have used an average spot jet fuel price assumption of US$76/bbl. The spot jet fuel price for FY22F has so far averaged US$80/bbl, above our full-year assumption, and is likely to rise slightly more, as the current spot jet fuel price is more than US$105/bbl.
  • We maintain our end-CY22F target price for SIA at S$5.86, still based on an unchanged target P/BV multiple of 1.06x (1 standard deviation above the mean since 2011 of 0.93x), applied to the end-FY23F adjusted BVPS.

Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @

Raymond YAP CFA CGS-CIMB Research | 2022-02-17

Read also CGS-CIMB's most recent report:
2023-01-16 Singapore Airlines (SIA) - Time To Pocket Share Price Gains.

Previous report by CGS-CIMB:
2022-12-06 Singapore Airlines - Merger Of Vistara & Air India ~ Better Than Standing Alone.

Price targets by 3 other brokers at SIA Target Prices.
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