Singapore Airlines (SIA) reported a 3.3% YoY increase in revenue to S$16.3b and a 47.6% YoY fall in net profit to S$682.7m for FY19, dragged by higher fuel costs; the group had also recognised its share of losses (S$116m) arising from Virgin Australia’s non-cash accounting adjustments in prior quarters. Results were within expectations as full year net profit was just 2% higher than our full year forecast.

The group has declared a final dividend of S$0.22/share, bringing the full year dividend to S$0.30/share (vs. S$0.40/share a year ago), which was in line with our expectations. Going forward, growth in forward passenger bookings in the months ahead is tracking positively against capacity injection, with robust premium cabin demand. However, ongoing trade disputes and slowing economic growth in key markets pose uncertainties.

Pending an analyst briefing, we maintain our BUY rating but put our fair value estimate of S$11.02 under review.

Source: OCBC Research - 17 May 2019