Broker Name: OCBC Investment Research
Date of Report: 14 November 2025
Excerpt from OCBC Investment Research report.
Report Summary
- Singapore Airlines (SIA) reported a 1.9% year-on-year increase in 1HFY26 revenue, but net profit fell 67.8% due to losses from its Air India associate.
- The company announced a special dividend plan of 10 Singapore cents per share annually for FY26-28, alongside an interim and special interim dividend, but the total payout is 20% lower year-on-year, reflecting weaker profits.
- SIA’s performance was impacted by lower passenger yields, rising competition, and cost pressures, especially at its Scoot subsidiary, although passenger demand and load factor remained strong.
- Cargo revenue declined slightly, and Air India’s operational issues and regional conflicts have led to reduced capacity and ongoing financial challenges.
- The fair value estimate for SIA shares was reduced from SGD7.10 to SGD6.40 due to reduced earnings, persistent uncertainties, and a lower target price-to-book multiple; the stock is rated HOLD.
- Despite near-term headwinds, SIA’s strong brand, service quality, and ongoing investments in fleet and sustainability position it well for long-term growth.
- Risks include further weakness in cargo demand, increased competition, and potential moderation in air travel demand and pricing.
- SIA has made progress in reducing its carbon intensity and continues to invest in sustainable aviation, but its emissions remain above the industry average.
- Potential catalysts for the stock include a faster recovery in capacity, strong network growth in Asia Pacific, and favorable oil price movements.
- Long-term investors may still find value in SIA as it transitions from recovery to growth, but patience is required as transformation programs, especially involving Air India, may take years.
Above is an excerpt from a report by OCBC Investment Research. Clients of OCBC Investment Research can be the first to access the full report from the OCBC Investment Research website: https://www.ocbc.com/personal-banking/investments/investment-research.page
