Downgrade SIA to SELL – SIA’s 1QFY26 reported net profit of S$186m was a major miss against our guided range of S$400m-500m. We cut our FY26-28 earnings forecasts by 30%/18%/21%, respectively.
1QFY26 results a major miss.
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Group revenue was in line with our projection, rising 1.5% y-o-y, driven by increased pax flown revenue (+0.9% y-o-y) and engineering and other service revenue (+13.7% y-o-y, stronger than projected), partly offset by lower cargo flown revenue (-1.9% y-o-y, weaker than projected).
Three key factors causing the miss include:
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Larger-than-projected drop interest income due to lower cash balance as well as a sharp decline in deposit interest rates.
Heavier-than-projected drag from 25.1%-owned associate Air India, which resulted in the overall JV/associate contribution sinking into losses, with a S$122m shortfall compared with the overall positive contribution by JV/associate entities in 1QFY25 without Air India.
Pax yield and cargo yield moderated y-o-y in 1QFY26.
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Above is an excerpt from a report by UOB Kay Hian Research. Clients of UOB Kay Hian may be the first to access the full PDF report @ https://www.utrade.com.sg/.
