Singapore Airlines - Stock Analyst Research

Target Price*SGD 5.91
Recommendation REDUCE
Market Cap*-
Publication Date22 Feb 2024

*At the time of publication

Singapore Airlines - Costs escalate, yields under pressure

  • 3Q24 operating profit fell 19.3% YoY to S$609mn, as yield decline and inflationary cost pressure (+9.3%) offset strong passenger traffic (+19.1%) and cargo load (+3.9%).  Net profit was lifted (+4.9%) by positive contributions from associates, and other one-offs including higher interest income, gains from aircraft sale and carried forward tax losses.
  • 9M24 net profit of S$2.1bn is above our FY24e forecast. We raise our FY24e net profit by 10.5%, as passenger load factors are coming in above our earlier assumptions. However, 4Q24e is expected to fall YoY and QoQ with mounting pressure on yields and costs.
  • We maintain a REDUCE recommendation, and raise our TP to S$5.91 (prev. S$5.45) at 1x FY25e P/B, as we roll over to the new FY. This factors in a projected 31% decline in net profit for FY25e.



The Negatives

– Revenue grew slower than volume. The surge in passenger (pax) volume (+19.1% YoY) and cargo (+3.9%) was offset by lower pax yields (-6.6%) and cargo (-37.4%) due to competition. Both pax yields (9.9 cents) and cargo yield (40.3 cents) are 20% and 32% above pre-pandemic level, respectively, held up by still high load factors. If pax load factor decline in subsequent quarters, pax yield, as measured by revenue per available seat-km (RASK) could likely fall at a faster rate.


– Cost escalated. This is despite a 6.6% decline in jet fuel prices. Besides bigger capacity, cost increase was led by higher passenger cost such as inflight meals, ground handling charges and staff costs. Management expects further increase as more supply contracts are being renewed.


– Operating profit fell 19.3%. Scoot’s operating profit fell 70.5% YoY in 3Q24, after a 44.8% YoY gain in 1H24. 3Q24 load factor of 90.5% was just 1.6% point above breakeven. Operating profit at the full-service carrier fell 9.4%, hurt by lower cargo revenue.


– Net profit gain of 4.9% was due to several one-offs. Besides positive contributions from associates, net profit benefitted from several one-offs, including tax losses carried forward, the surplus on disposal of aircraft, and higher interest income, amounting to about S$155mn.


– Net debt rose to S$3.2bn (Mar 23: net cash S$5.2bn) after a partial redemption of MCBs. Net gearing was 0.2x. Book value as of the end of Dec 23 was S$5.24 per share (Mar23: S$6.68).


The Positive

– Nil



Yields are expected to fall further as airfares continue to normalize. Airlines are expected to lower fares to fill seats as travel demand eases. On the other hand, costs are expected to rise with more flight restorations and more new airlines launching services.


Maintain REDUCE and raise TP to S$5.91, from S$5.45 previously, which is based on 1x FY25e book value, as we roll over to a new FY. We have raised our FY24e net profit estimates by 10.5% as passenger load factors are coming in above our earlier assumptions.

About the author

Peggy Mak
Research Manager

Peggy has been a sell-side equity analyst for 22 years and a fund manager for 15 years.

Latest Reports

Contact us to Open an Account

Need Assistance? Share your Details and we’ll get back to you


This material is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in any of the exchange-traded fund (“ETF”) or the unit trust (“Products”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. You should read the Prospectus and the accompanying Product Highlights Sheet (“PHS”) for key features, key risks and other important information of the Products and obtain advice from a financial adviser (“FA“) pursuant to a separate engagement before making a commitment to invest in the Products. In the event that you choose not to obtain advice from a FA, you should assess whether the Products are suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM, any of its Participating Dealers (“PDs“) for the ETF, or any of its authorised distributors for the unit trust managed by PCM.  

An ETF is not like a typical unit trust as the units of the ETF (the “Units“) are to be listed and traded like any share on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing on the SGX-ST does not guarantee a liquid market for the Units which may be traded at prices above or below its NAV or may be suspended or delisted. Investors may buy or sell the Units on SGX-ST when it is listed. Investors cannot create or redeem Units directly with PCM and have no rights to request PCM to redeem or purchase their Units. Creation and redemption of Units are through PDs if investors are clients of the PDs, who have no obligation to agree to create or redeem Units on behalf of any investor and may impose terms and conditions in connection with such creation or redemption orders. Please refer to the Prospectus of the ETF for more details.  

Investments are subject to investment risks including the possible loss of the principal amount invested. The purchase of a unit in a fund is not the same as placing your money on deposit with a bank or deposit-taking company. There is no guarantee as to the amount of capital invested or return received. The value of the units and the income accruing to the units may fall or rise. Past performance is not necessarily indicative of the future or likely performance of the Products. There can be no assurance that investment objectives will be achieved.  

Where applicable, fund(s) may invest in financial derivatives and/or participate in securities lending and repurchase transactions for the purpose of hedging and/or efficient portfolio management, subject to the relevant regulatory requirements. PCM reserves the discretion to determine if currency exposure should be hedged actively, passively or not at all, in the best interest of the Products.  

The regular dividend distributions, out of either income and/or capital, are not guaranteed and subject to PCM’s discretion. Past payout yields and payments do not represent future payout yields and payments. Such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value (“NAV”) of the Products. Please refer to <> for more information in relation to the dividend distributions.  

The information provided herein may be obtained or compiled from public and/or third party sources that PCM has no reason to believe are unreliable. Any opinion or view herein is an expression of belief of the individual author or the indicated source (as applicable) only. PCM makes no representation or warranty that such information is accurate, complete, verified or should be relied upon as such. The information does not constitute, and should not be used as a substitute for tax, legal or investment advice.  

The information herein are not for any person in any jurisdiction or country where such distribution or availability for use would contravene any applicable law or regulation or would subject PCM to any registration or licensing requirement in such jurisdiction or country. The Products is not offered to U.S. Persons. PhillipCapital Group of Companies, including PCM, their affiliates and/or their officers, directors and/or employees may own or have positions in the Products. Any member of the PhillipCapital Group of Companies may have acted upon or used the information, analyses and opinions herein before they have been published. 

This advertisement has not been reviewed by the Monetary Authority of Singapore.  


Phillip Capital Management (S) Ltd (Co. Reg. No. 199905233W)  
250 North Bridge Road #06-00, Raffles City Tower ,Singapore 179101 
Tel: (65) 6230 8133 Fax: (65) 65383066