Broker Name: CGS International
Date of Report: April 2, 2026
Excerpt from CGS International report.
Report Summary
- Stock: Singapore Airlines (SIA SP)
- Action: Hold (no change)
- Target Price: S\$6.77 (lowered from S\$7.44)
- Investment Thesis: SIA’s FY27F core net profit is forecasted to decline 30% year-on-year due to the surge in jet fuel prices driven by the US/Israel-Iran war, despite robust fuel hedges and increased ticket prices on European and Australian routes. However, SIA is unable to fully offset higher fuel costs, particularly on regional and price-sensitive routes.
- Key Highlights:
- SIA’s fuel hedge covers nearly 50% for the upcoming two quarters but will decline in subsequent quarters, increasing exposure to high fuel prices.
- Reduced flight operations by Middle Eastern carriers have allowed SIA to gain market share and raise fares to Europe and Australia, but this may not be sustainable for all routes.
- Upside risk: Sharp profit recovery if oil prices fall after the war ends.
- Downside risk: Persistently high oil prices if the Strait of Hormuz remains restricted or supply disruptions persist.
- Valuation: TP based on 1.35x CY26F P/BV (+1.5 s.d. from long-term mean).
- Financials:
- FY27F core net profit forecast cut by 37%.
- FY28F profit forecasts unchanged, assuming oil price normalization and gradual fare adjustments.
- Dividend yield expected to be 3.0% for FY27F, rising to 4.8% in FY28F.
- Other Notable Points:
- Air India (25.1% owned) expected to report larger losses due to longer routes, lack of fuel hedges, and weaker rupee.
- SIA’s ESG initiatives continue, with a target for net zero carbon emissions by 2050 and increasing use of Sustainable Aviation Fuel (SAF).
above is an excerpt from a report by CGS International. Clients of CGS International can be the first to access the full report from the CGS International website : https://www.cgs-cimb.com
