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  Bookmark this page   Tuesday, 23 Dec 2014
 
Today's Headlines
Singapore Airlines: Longer-term impact from falling oil prices

We view the slide in oil prices to be positive on Singapore Airlines’ (SIA) profitability since jet fuel makes up ~40% of SIA’s total operating expenses but we believe the effects are visible only in the longer-term, at least from FY16 onwards. Hence, we cut our assumption on SIA’s FY16 jet fuel cost from US$112/barrel to US$100/barrel, which increase its operating margin from 2.8% to 3.5%. While lower oil prices should improve SIA’s profitability significantly, we believe there are several factors at work that negate partly the positive impact. Factoring in the new jet fuel cost assumption and other factors, our FY16 PATMI forecast increases by ~19% to S$524.6m. Consequently, rolling forward our valuations to 0.95x FY16 P/B (0.5 SD below 5-year historical average), we increase our fair value estimate from S$10.12 to S$10.80. Maintain HOLD.

 
  Market Pulse
Market Pulse: S-REITs Sector, SIA (19 Dec 2014)
Market Pulse: SIA, Olam (17 Dec 2014)
Market Pulse: Astro (15 Dec 2014)
Market Pulse: Consumer Sector (12 Dec 2014)
Market Pulse: Suntec REIT (11 Dec 2014)
Market Pulse: Sheng Siong (10 Dec 2014)
Market Pulse: Nam Cheong, Kim Heng (9 Dec 2014)
Market Pulse: Golden Agri, SIA (8 Dec 2014)
Market Pulse: Aviation and Shipping sectors (5 Dec 2014)
Market Pulse: Singapore Residential Property (4 Dec 2014)
  Research
Singapore Airlines: Longer-term impact from falling oil prices
We view the slide in oil prices to be positive on Singapore Airlines’ (SIA) profitability since jet fuel makes up ~40% of SIA’s total operating ex ...
Singapore REITs: Better prepared for volatility ahead
2014 has been a relatively solid year for the S-REITs sector in terms of both share price and financial performance. Looking ahead, market expecta ...
Astro: Steady 3QFY15 showing
Astro Malaysia Holdings Berhad (Astro) posted a 5% YoY increase in 3QFY15 revenue to MYR180.2m; but net profit slipped 9% to MYR113.3m, mainly due ...
Consumer Sector: Upgrade to NEUTRAL
In view of expected stimulus in emerging ASEAN countries such as Indonesia, Philippines and Thailand, regional consumption growth is likely to imp ...
Suntec REIT: Had a good run, downgrade to HOLD
We expect Suntec REIT to be a beneficiary of the robust momentum in Singapore’s prime office sector, although rental growth is likely to moderate ...
Sheng Siong Group: A safe house in uncertain times
Looking ahead, 4Q14 will see contribution from Sheng Siong Group’s new ~4.0k sq ft store in the Penjuru area that recently started operations. The ...
 
 Strategy
Singapore REITs: Better prepared for volatility ahead
2014 has been a relatively solid year for the S-REITs sector in terms of both share price and financial performance. Looking ahead, market expecta ...
Consumer Sector: Upgrade to NEUTRAL
In view of expected stimulus in emerging ASEAN countries such as Indonesia, Philippines and Thailand, regional consumption growth is likely to imp ...
Aviation & Shipping Sectors: Gloomy weather to persist
In 2014, airlines continued to face intense competition and as a result of overcapacity, yields remained depressed, affecting profitability. The a ...
Singapore Residential Property: Expect headwinds to continue
We forecast residential home prices to dip 10%-15% over 2015 - 2016 and expect primary residential sales in 2015 to stay muted at between eight an ...
Land Transport Sector: Positive outlook for 2015
The journey for Singapore’s Public Transport Operators (PTOs), namely ComfortDelGro Corporation Limited (CDG) and SMRT Corporation Limited (SMRT), ...
Singapore Strategy: Greater Need for Stock Picking in 2015
As developed markets rallied in 2014, Singapore’s STI gains of 4% YTD appears feeble compared to >20% gains for several key markets. However, this ...
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