Why did SIA shares climb 3% last week?

• Singapore Airlines (SGX: C6L) share price hit S$5.08 on Friday (20 August 2021)
• The airline will be kickstarting in-bound passenger flights from Germany from 07 September
• The stock, which is up 12% in the last three months, has a consensus target price of S$4.56
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SIA share price: what’s the latest?

Singapore Airlines shares jumped up 3% last Friday, after it was reported that it would operate flights from Germany starting from 07 September 2021.

A total of seven designated in-bound passenger flights from Germany to Singapore taking only fully vaccinated passengers would take place each week.

Five of these flights will be operated by SIA while the remaining two will be operated by German airline Lufthansa.

This new arrangement comes under a new Vaccinated Travel Lane announced by Singapore on 19 August, in which fully vaccinated travellers flying in from Germany will not have to serve a stay-home notice upon arrival.

SIA also announced the operation of one flight weekly for fully vaccinated travellers from Brunei to Singapore on the same day, with fully vaccinated travellers from Brunei also allowed to enter Singapore under the Vaccinated Travel Lane.

If the new travel arrangements are suspended, SIA says it will adhere to authorities’ guidance and will inform customers accordingly.

Additionally, if flights have to be cancelled or changed to one that admits passengers regardless of vaccination status, all affected customers will be eligible for a refund of their tickets.

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SIA shares are up some 12% in the last three months, and nearly 18% year to date.

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Are SIA shares worth buying now?

The blue-chip currently has a consensus rating of ‘underperform’ and target price of S$4.56, based on the latest SGX StockFacts analyst data.

The target price represents a potential 9.3% downside from SIA’s last traded price of S$5.03 as at 15:10 SGT on Monday (23 August).

Two weeks ago, UOB analysts lifted their call on SIA to a ‘hold’ and target price to S$4.85, after the group reduced its net loss by 64% year-on-year to S$409 million for the June-ending quarter.

The analysts believe that while SIA will continue to face the challenge of having sufficient capacity to cater to both passenger and cargo demand, sentiment towards the aviation industry is still likely to improve further down the road.

Meanwhile, OCBC analysts reiterated a ‘hold’ recommendation on a higher target price of S$4.90 (against S$4.75 previously), after they applied a ‘slight environmental, social and governance (ESG) premium’ and adjustments on the stock’s valuation.