Singapore Airlines - CGS-CIMB Research 2023-11-08: Somewhat Overcast Skies Into 2HFY24

• SIA (SGX:C6L) delivered an estimated 2QFY24 (Jul to Sep 2023) core net profit of S$648m, in line with our S$600m- 650m preview forecast.
• The 2QFY24 EBIT of S$799m was 5.9% higher than 1QFY24’s S$755m, but we believe that after stripping out forex gains, the 2Q EBIT may actually be lower than the immediately-preceding 1Q.

Decent 2QFY24, albeit weaker than 1QFY24 on higher fuel prices

• - Read this at SGinvestors.io -
• Scoot’s core EBIT fell 24% q-o-q to S$9m, while
• cargo’s core EBIT fell 97% to S$2m.

All were affected by the rise in jet fuel prices compared with 1QFY24, but the cargo business was also impacted by the 9% q-o-q drop in RAFTK (due to excess global airfreight capacity), while Scoot saw its RASK (revenue per available seat kilometre capacity) fall 3% q-o-q, as it expanded into less-lucrative routes. Only SQ managed to eke out a 0.5% q-o-q rise in its RASK during 2QFY24, but this was a major deceleration compared with the 9% q-o-q jump during 2QFY23.

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PLFs (passenger load factor) at both SQ and Scoot remained very high y-o-y, but declined between 30-70bp q-o-q.

Topline may come under competitive pressure

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Raymond YAP CFA CGS-CIMB Research | https://www.cgs-cimb.com 2023-11-08 SGinvestors.io

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