Can SIA shares fly higher?

• Singapore Airlines Ltd (SGX: C6L) share price closed at S$5.19 on Tuesday (28 June 2022)
• The national airline’s stock has risen slightly recently, following the release of its May 2022 operating results
• UOB’s equity research team has kept a target price of S$4.88 and ‘hold’ call
• Keen to trade SIA shares? Open an account with us to start today

Singapore Airlines stock price: what’s the latest?

Singapore Airlines (SIA) share value has increased since the group shared its May 2022 operating results.

However, the national carrier’s stock has declined approximately 6.5% in the last one month, with the aviation sector’s recovery thrown into spotlight amid rising oil prices.

On a year-to-date basis, SIA’s market cap is up by around 2.8%.

In terms of stock outlook, the large cap company has an average rating at around ‘neutral’, alongside an average share price target of S$5.38 (based on the most updated SGX StockFacts data).

The price target equates to a 4.5% upside potential from SIA’s last traded stock price of S$5.15 on Wednesday (29 June 2022).

How do analysts view SIA?

The latest call came from UOB analyst Roy Chen, who retained his firm’s target price for the airline at S$4.88 on 21 June, while keeping a ‘hold’ rating.

He wrote in an investor note that the May 2022 operation data of SIA ‘reaffirms the sector’s strong recovery momentum in the near term’.

‘However, beyond the near-term optimism, high fuel costs and uncertainties of Covid-19 policies in China may limit the extent of the sector’s recovery,’ he noted, adding that the US Fed’s aggressive rate hikes and resultant higher risk-free rates would also weigh on companies’ valuations.

As such, he recommended that investors ‘offload SIA into share price strengths’.

UOB’s target price of S$4.88 is pegged to a 1.12 times FY23F price-to-book ratio.

How did the group fare in May 2022?

The SIA Group saw passenger capacity (measured in available seat-kilometres) reach 61% of pre-Covid-191 levels in May 2022.

This was also an improvement of 126.3% from May 2021, and four percentage points higher than April 2022.

The group passenger load factor for the month stood at 78.2%, the highest since the onset of the pandemic. This was an uptick of 5.5 percentage points month-on-month, and 63.9 percentage points year-on-year.

Its flagship airline, Singapore Airlines, and low-cost arm, Scoot, carried a total of 1.71 million passengers in May 2022, up 17.4% from the previous month.

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