SINGAPORE: Shares of Singapore Airlines (SIA) soared to their highest levels in more than three years on Wednesday (May 17), as the national carrier emerged from the woes of the COVID-19 pandemic to deliver a record annual profit.
The counter was last seen at S$6.03, up 1.86 per cent and hitting levels unseen since February 2020.
The stock outperformed the benchmark Straits Times Index, which fell 1.08 per cent to 3,179.36.
After the market closed on Tuesday, SIA reported a net profit of S$2.16 billion (US$1.63 billion) for the year ended Mar 31, rebounding from a loss of S$962 million a year earlier.
The upbeat earnings results – a record in its 76-year history – also reversed three straight years of losses brought about by the pandemic.
Strong demand for air travel following the reopening of borders drove revenue, operating profit and passenger load factor, the airline said in its media release.
Group passenger capacity reached 79 per cent of pre-COVID-19 levels at the end of March, with SIA and Scoot carrying a total of 26.5 million passengers, six times more than the year before.
The passenger load factor also increased by 55.3 percentage points to 85.4 per cent - the highest in the company's history.
However, the airline saw some softening in the cargo segment, as demand for air freight declined alongside an easing in the supply chain disruptions brought about by the pandemic.
Maybank Research said demand for air travel will remain robust moving forward, underpinned by the recovery in air travel in East Asia.
Forward sales also remain healthy across all cabin classes, led by a strong pick up in bookings to China, Japan and South Korea, its analysts wrote in a note.
China’s reopening, in particular, will help to accelerate SIA’s recovery, said DBS Insights, adding that it expects the airline’s passenger volumes to return to 2019 levels in the second quarter of FY2024.
“(We) hold the view that passenger yields should remain at elevated levels for some time (albeit moderating) on the back of revenge travel and measured capacity growth by competitors,” DBS analysts said.
Cargo demand, on the other hand, will stay soft in the near term due to macroeconomic headwinds. The airline also faces the risk of persistent cost pressures stemming from inflation, analysts said.
Alongside the results, SIA’s board recommended a final dividend of S$0.28 per share. Including the interim dividend of S$0.10 per share, the total dividend payout for the fiscal year stands at S$0.38 per share.
The final dividend is subject to shareholder approval at the upcoming annual general meeting on Jul 27 and will be paid out to shareholders on Aug 18.
DBS, in its research note, said the "generous" final dividend per share, which translates into a payout ratio of 52 per cent, “greatly exceeded” its expectations and “should enhance investor sentiment on the stock”.
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The counter was last seen at S$6.03, up 1.86 per cent and hitting levels unseen since February 2020.
The stock outperformed the benchmark Straits Times Index, which fell 1.08 per cent to 3,179.36.
After the market closed on Tuesday, SIA reported a net profit of S$2.16 billion (US$1.63 billion) for the year ended Mar 31, rebounding from a loss of S$962 million a year earlier.
The upbeat earnings results – a record in its 76-year history – also reversed three straight years of losses brought about by the pandemic.
Strong demand for air travel following the reopening of borders drove revenue, operating profit and passenger load factor, the airline said in its media release.
Group passenger capacity reached 79 per cent of pre-COVID-19 levels at the end of March, with SIA and Scoot carrying a total of 26.5 million passengers, six times more than the year before.
The passenger load factor also increased by 55.3 percentage points to 85.4 per cent - the highest in the company's history.
However, the airline saw some softening in the cargo segment, as demand for air freight declined alongside an easing in the supply chain disruptions brought about by the pandemic.
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Maybank Research said demand for air travel will remain robust moving forward, underpinned by the recovery in air travel in East Asia.
Forward sales also remain healthy across all cabin classes, led by a strong pick up in bookings to China, Japan and South Korea, its analysts wrote in a note.
China’s reopening, in particular, will help to accelerate SIA’s recovery, said DBS Insights, adding that it expects the airline’s passenger volumes to return to 2019 levels in the second quarter of FY2024.
“(We) hold the view that passenger yields should remain at elevated levels for some time (albeit moderating) on the back of revenge travel and measured capacity growth by competitors,” DBS analysts said.
Cargo demand, on the other hand, will stay soft in the near term due to macroeconomic headwinds. The airline also faces the risk of persistent cost pressures stemming from inflation, analysts said.
Alongside the results, SIA’s board recommended a final dividend of S$0.28 per share. Including the interim dividend of S$0.10 per share, the total dividend payout for the fiscal year stands at S$0.38 per share.
The final dividend is subject to shareholder approval at the upcoming annual general meeting on Jul 27 and will be paid out to shareholders on Aug 18.
DBS, in its research note, said the "generous" final dividend per share, which translates into a payout ratio of 52 per cent, “greatly exceeded” its expectations and “should enhance investor sentiment on the stock”.
Continue reading...