Singapore Airlines target raised to SGD23 on earnings view - UBS


Singapore (XFN-ASIA) - UBS Investment Research has lifted its

target price for Singapore Airlines Ltd (SIA) to 23 sgd from 22 saying it expects

the flag carrier's earnings to grow substantially in the next three years.

"SIA has delivered unit revenue compounded annual growth rate (CAGR) of 7 pct since the year to March 2002, and this accelerated to 8 pct in the year to March 2007, underpinned by strong corporate demand and higher load factors," UBS said in a note to investors.

"Modest industry-wide capacity growth and high load factors should make it easier for SIA to manage yields higher. We assume unit revenue growth will slow to 5 pct this year, but given the recent fare increases, we think the risk is to the upside," it added.

UBS forecasts SIA's pre-exceptional net profit to rise from 1.23 bln sgd in the past year to March to 1.76 bln in the year to March 2008, 1.94 bln in the year to March 2009 and 2.10 bln in the following fiscal year.

UBS also expects SIA to increase its dividend payout even if it proceeds with the proposed acquisition of a stake in China Eastern Airlines.

At 9.01 am, SIA was flat at 18.50 sgd with 109,000 shares changing hands.

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