Why did SIA shares hit a one-year peak this week?

The flagship carrier saw shares hit a one-year high on Tuesday (02 March 2021), as travel sentiments improved globally.

  • Singapore Airlines (SGX: C6L) share price soared over 7% this week
  • The rally followed those of US aviation stocks, after their ratings were upgraded in light of the improved pandemic situation
  • UOB, CIMB and OCBC analysts maintained ‘buy’ calls in their latest notes
  • Trade SIA, long or short, with an IG account

SIA share price: what’s the update?

Singapore Airlines (SIA) saw its share price rally as much as 7.4% earlier this week, following a global aviation stock rally that had begun last week.

The improved sentiments were led by US airlines, which experienced a ratings upgrade to ‘buy’ from hold’ by Deutsche Bank analysts, in light of the falling number of coronavirus infections and ongoing vaccine roll-out.

SIA shares hit a one-year peak of S$5.34 at the start of Tuesday’s (02 March 2021) trading session. Over 41.3 million shares exchanged hands on the counter on Monday and Tuesday.

Shares closed at S$5.22 on Wednesday (03 March), up 0.77% on an intraday basis.

What’s the latest stock outlook?

Looking ahead, the stock currently has a 12-month average price target of S$4.40 a share and consensus rating of ‘neutral’, based on the latest broker poll data from Singapore Exchange (SGX) StockFacts.

UOB analyst K Ajith, who has a ‘hold’ call and target price of S$4.47 for SIA, told The Business Times earlier this week that SIA's market capitalisation has recovered to above pre-Covid levels.

‘At current price, SIA would be trading at almost 1.2 times average FY22 and FY23's book value, and this is after treating the mandatory convertible bonds as equity,’ he said.

‘As for what's driving the price, I believe it is the global phenomena of fund flow into the sector, which has underperformed substantially,’ he added.

Meanwhile, CIMB on 26 February maintained an ‘add’ rating and price target of S$4.89, while OCBC also kept their ‘buy’ recommendation and price estimate at S$4.80 a share.

SIA has used S$8.2 billion of the S$8.8 billion raised

On Monday, SIA group revealed that a further S$1.1 billion, out of the gross proceeds of the S$8.8 billion raised from the rights issue, had been utilised between 14 December 2020 and 24 February 2021.

Approximately S$0.4 billion was applied towards the funding of ongoing operating expenses; S$0.1 billion was applied towards refund of tickets sold on flights which have been subsequently cancelled; and roughly S$0.6 billion was applied towards aircraft and aircraft-related payments.

The cumulative use of proceeds thus stands at approximately S$8.2 billion for the period between 8 June 2020 and 24 February 2021.

Since the beginning of FY2020/21, SIA has increased its liquidity by approximately S$13.4 billion. In January 2021, SIA raised US$500 million from bonds due in July 2026 and S$150 million via a loan secured on its aircraft.

How to trade SIA stocks with IG

Are you feeling bullish or bearish on SIA’s stocks?

Either way you can buy (long) or sell (short) the asset using IG's industry-leading trading platform, or by investing in the share directly, in a few easy steps:

  1. Create a live or demo IG Trading Account, or log in to your existing account
  2. Enter <Singapore Airlines> in the search bar and select the instrument
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

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