Singapore Airlines (SIA) announced yesterday that discussions on a possible equity investment in South Korea’s Jeju Air have now ceased and the parties will not be proceeding with a transaction. In our view, SIA is currently facing serious pressures from expansion of gulf carriers and its previously successful focus on just longhaul Americas and Europe routes is no longer the recipe for future growth. Strategic investments may help, but these processes take time. As we had not factored in any potential investment in Jeju Air, we keep our forecasts unchanged. Maintain HOLD with FV of S$11.27.

Source: OCBC Research - 14 Aug 2015