Singapore Airlines - OCBC Investment 2024-11-11: Moderating Trajectory

• Singapore Airlines (SIA, SGX:C6L)’s 2QFY25 revenue grew 2% y-o-y to S$4.8b – Passenger flown revenue slipped 0.9% y-o-y to S$3.8b as yields declined by 6.5%. Passenger capacity expanded by 9.7%, outpacing traffic growth at 6.3%. Altogether, passenger load factors (PLF) slipped 2.8 percentage points (ppt) y-o-y or 1.1 ppt q-o-q to 85.8%.
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Group expenditure jumped 14.7% y-o-y to S$4.5b.

• The increase was broad-based. Non-fuel expenditure grew 16.6% y-o-y, outstripping the increase in capacity, on inflationary cost pressures which mainly impacted handling and passenger costs.
• Meanwhile, net fuel costs increased 10.6% y-o-y on higher volume uplifted and lower fuel hedging gain, partially offset by lower fuel prices.
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1HFY25 revenue in line with our expectations, but bottom line missed.

• Underlying trends were similar on a 1HFY25 basis, with SIA's revenue and expenditure ticking up 3.7% and14.4% y-o-y to S$9.5b and S$8.7b, respectively. Operating profit and net profit moderated 48.8% and 48.5% y-o-y to S$795.6m and S$742m, respectively.
• SIA’s 1HFY25 revenue made up 49.9% of our initial full year forecast, which we deem to be in-line with our expectations; however, its bottom line missed on higher-than-expected costs, with PATMI only coming in at 42.9% of our estimates.

Unchanged interim dividend.

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Ada Lim OCBC Investment Research | https://www.iocbc.com/ 2024-11-11 SGinvestors.io

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