CGS International

May 16, 2025

Singapore Airlines (SIA): Final DPS of 30 Scts Met Expectations; Hold Rating Reiterated

Singapore Airlines: FY25 Performance and Dividend Details

Singapore Airlines (SIA) reported a FY25 core net profit that exceeded forecasts by 12%, primarily due to positive tax impacts in 2HFY25. Pretax profit, however, was 6% below expectations due to increased depreciation. The report reiterates a Hold rating with an increased target price (TP) of S\$6.88, adjusting the end-CY25F P/BV multiple from 1.1x (+1 standard deviation from the 2011 mean) to 1.3x (+2 standard deviations). The share price is expected to remain stable until the ex-dividend date on August 8, 2025F, supported by a final dividend per share (DPS) of 30 Singapore cents, aligning with projections. [[1]]

2HFY25 Earnings Analysis

The core net profit for 2HFY25 stood at RM946 million, a 27% increase hoh, driven by higher EBIT, which benefited from reduced fuel prices but was partially offset by increased non-fuel unit costs and seasonally weaker demand. An unusual tax income in 2HFY25, compared to a tax expense in 1HFY25, also contributed positively. These gains were partially offset by associate losses from equity-accounted losses from Air India starting November 12, 2024. [[1]]

However, compared to the previous year, 2HFY25 core net profit decreased by 20% due to lower pax and cargo unit revenues, compounded by Air India’s losses. FY25 core net profit saw a 33% decrease, mainly due to moderating pax and cargo yields, outweighing capacity growth. The reported net profit for FY25 was enhanced by a S\$1.1 billion exceptional gain from the sale of Vistara to Air India, recorded in 3QFY25. [[2]]

Revised Dividend Forecasts Due to Aircraft Delivery Delays

FY25 marks the third consecutive year SIA has surpassed full-year expectations. The post-Covid-19 demand surge significantly boosted FY23 core profits, reaching a historical peak in FY24. The moderation in FY25 profits was slower than anticipated, aided by a gradual decline in pax yield and lower oil prices. [[2]]

• SIA’s DPS declarations:
• FY23: 38 Scts (10 Scts interim, 28 Scts final)
• FY24: 48 Scts (10 Scts interim, 38 Scts final)
• FY25: 40 Scts (10 Scts interim, 30 Scts final)

The dividend payout ratio against core net profit was 58% in FY23, 56% in FY24, and increased to 70% in FY25 due to aircraft delivery delays, resulting in FY25 capex of S\$1.8 billion against an original guidance of S\$2.9 billion. [[2]]

Given these delays, FY26F DPS forecast is raised to 28 Scts (69% payout, previously 22 Scts at 55% payout) and FY27F DPS forecast to 24 Scts (69% payout, previously 18 Scts at 54% payout). [[3]]

1QFY26F Earnings Outlook

The Hold rating is reiterated, and the target P/BV multiple is increased due to potential investor interest spurred by a drop in Brent oil prices to US\$66/bbl in Apr-May 2025 (vs. US\$76/bbl in Jan-Mar 2025) and a decrease in the US\$ to S\$1.30 (vs. US\$1.34 as of March 31, 2025). These factors are expected to boost 1QFY26F earnings, representing a key upside risk for SIA. [[3]]

While the Brent price assumption has been reduced from US\$75 to US\$70/bbl for FY26F, pax and cargo yield assumptions have also been lowered due to global business uncertainty from US “Liberation Day” tariffs, which may moderate business travel and cargo demand. This poses a key downside risk from 2QFY26F onwards. [[4]]

Key Changes Noted

• FY26-27F core EPS forecasts have been tweaked upwards by 2-4%, factoring in lower jet fuel prices, but also assuming yields will eventually track costs lower due to global business uncertainty from US “Liberation Day” tariffs. [[4]]
• FY28F core EPS forecast introduced in this report. [[4]]

Financial Summary: [[5]]

Results Comparison Table

Figure 1: Half-yearly results comparison [[2]]

Key Abbreviations

• SIA: Represents the SIA group, including passenger airlines (and cargo) and SIA Engineering. [[2]]
• SQ: SIA mainline carrier, now combined with SilkAir (short-haul full-service carrier). [[2]]
• TR: Scoot, the low-cost carrier (LCC) wholly owned by SIA. [[2]]
• ASK: Available seat km capacity, measure of passenger capacity. [[2]]
• RPK: Revenue passenger km demand, measure of passenger demand. [[2]]
• PLF: Passenger load factor, RPK divided by ASK. [[2]]
• Pax yield: Pax revenue per RPK demand. [[2]]
• RASK: Revenue per ASK capacity. [[2]]
• AFTK: Available freight tonne km, measure of air freight capacity. [[2]]
• FTK: Freight tonne km, measure of air freight demand. [[2]]
• CLF: Cargo load factor, FTK divided by AFTK. [[2]]
• Cargo yield: Cargo revenue per FTK demand. [[3]]
• RAFTK: Revenue per AFTK capacity. [[3]]

Companies Mentioned

• Vistara: An airline brand under TATA SIA Airlines (Unlisted). [[3]]
• Air India: (Unlisted), wholly-owned by TATA Sons (Unlisted). [[3]]

Headline Quarterly Numbers

Figure 3: Headline quarterly numbers [[3]]

Passenger Airline Business: Full-Service Carriers (FSC)

Figure 4: Operating metrics – Full-service carriers (FSC) [[4]]

Passenger Airline Business: Low-Cost Carrier (LCC) – Scoot

Figure 5: Operating metrics – Low-cost carrier (LCC) [[4]]

SIA Group Passenger Airline: Unit Revenue vs. Unit Cost

Figure 6: SIA group passenger airline: spread between unit revenue and unit cost (cents/ASK) [[4]]