Should you trade SIA shares?

• Singapore Airlines Ltd (SGX: C6L) share price opened at S$5.31 on Thursday (1 September 2022)
• The group saw passenger carriage cross the two-million mark for the first time since the start of the pandemic
• CIMB’s equity research team raised its SIA rating to ‘add’ and price target to S$6.10
• Keen to trade SIA shares? Open an account with us to start today.

SIA stock price: what’s the latest forecast?

Singapore Airlines Ltd (SIA) shares rallied in mid-August 2022, after releasing its operating results for July 2022.

The aviation stock has a consensus rating of ‘rating’ and average price target of S$5.38, based on the latest analyst sentiments published by SGX StockFacts.

The price target equates to a slight upside potential from SIA’s last traded price of S$5.32 a share.

CIMB’s equity research team recently wrote that it expects the airline to ‘do very well in the coming quarters’.

This is ‘due to the combination of rising capacity restoration, strong demand, high load factors and robust yields’.

‘For FY2023 (1 April 2022 to 31 March 2023) as a whole, we think that the SIA Group should be able to restore 74% of its pre-Covid-19 capacity, rising to at least 95% in FY2024 or higher if China reopen its borders sooner’.

As such, they raised their 2022 year-end target price for SIA shares from S$5.89 to S$6.10 and rating to ‘add’ from ‘neutral’.

Key downside risks include the potential for higher oil prices in the event of negative geopolitical developments, and more competition once other airlines are able to deploy more of their fleet.

How did SIA Group fare in July 2022?

The group said in its July operating report that ‘demand for air travel remained robust during the peak summer season across every route region’.

This excluded East Asia, where travel restrictions remain in place in some key markets.

The group carried more than two million passengers in July 2022, up 7.5% from the previous month.

This was the first time that passenger carriage has crossed the two million-mark since the start of the Covid-19 pandemic.

Group passenger capacity in July 2022 was 4.9% higher than the month before, and 107.8% higher compared to a year ago. The group capacity also reached 67% of pre-Covid-19 levels during the month.

Passenger load factor (PLF) also reached a new pandemic-high of 87.4% (up 1.9 percentage points month-on-month and up 71.1 percentage points year-on-year). This is the second highest monthly PLF in the SIA Group’s history.

During the month, SIA resumed services to Shenzhen, China. At the end of July 2022, the group’s passenger network covered 99 destinations. SIA served 73 destinations, while Scoot served 47 destinations.

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