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A380 A Great Way to Fly

SIA rawks..  so, Warren Bufft's 'no touch airline stocks' is it still valid?  I would think he needs to worry about his 'commodities'  hahaha!   The global warming has made our world 'rot' faster than before, because compared to 50 years ago, it seems 'fungi (fungus) species reproduce more and more due to the WARMER temperatures and increased rainfall.   Things start to get rotten TWICE as fast...................

Scary huh?    Commodity - Is this still the stocks to look out for?

from the edge singapore

SIA soars

National carrier Singapore Airlines surprised the market yesterday with a return to the black: 3QFY2010 (SIA has a March year end) profits came in at $404 million, besting most analyst expectations. The market promptly rewarded the airline, sending its stock up 86 cents or 6.3% today to close at $14.52, marking its biggest gain since May 7, according to Bloomberg. Analysts too moved to upgrade the stock with OSK (Asia) Securities raising its call to a “buy” from “neutral”, CIMB-GK Securities upgrading it to a “trading buy” from an “underperform” and UOB Kay Hian rating it a “hold” from a “sell”.

The profit is SIA’s first in three quarters and according to Credit Suisse analyst Sam Lee is at the high end of a wide consensus that ranged from a loss of $400 million to a profit of $450 million. Lee also notes that the profit is the highest in the last seven quarters. Even more encouraging, passenger load factors in fact rose to a historical high of 82% while the cargo load factor of 65.1% was the highest in four years. “More importantly, yield grew 7% q-o-q, the first time in five quarters. We think the strong seasonal demand and high utilisation helped reduce discount and raise ticket prices. Moreover, cargo traffic grew 7.3% q-o-q and yield was up by an impressive 22% q-o-q,” Lee writes in a Feb 2 report.

Some of the enthusiasm spilled over to the counter of Tiger Airways Holdings, the low-cost carrier that is 34% owned by SIA. Shares of Tiger rose 4.1% or six cents today. The budget airline saw a 40% growth in passenger volume for FY2009 ended December and it said that December turned out to be its strongest month of passenger carriage since it commenced its operations in 2004. It now says it will take delivery of four Airbus A320 planes next year, instead of in 2016 as originally planned. And it has commenced trials in cargo services.

There wasn’t as much excitement at SIA Engineering though, the provider of aircraft maintenance, repair and overhaul services that is also a subsidiary of SIA. This morning, its staff performed a little song-and-dance number extolling the virtues of SIA Engineering at the officially opening of the company’s sixth hangar at Changi Airport, which is the first to offer commercial maintenance services for the Airbus A380 aircraft. Stephen Lee, chairman of SIA Engineering, says the new hangar features advanced work processes that will yield “double-digit improvements in productivity”. As the airline sector recovers, the company can be expected to get busier.

Chart Watch
AmFraser analyst Najeeb Jarhom sees resistance for SIA at $14.50 and $14.91 and believes the stock could pull back to below $14 going forward. That, he says, “should offer buying chances for medium-term players who can hold on till full year results due on May 14 when SIA can be expected to resume its dividend payout.”

Meanwhile, the Straits Times Index closed up 43.97 points today at 2,764.84. In a Feb 2 report, Phillip Securities technical analyst Phua Ming-weii points out that the index has been consolidating around its Jan 28 high of 2,763 and low of 2,718, making these short-term breakout levels. “While consolidations break out in either direction, we believe that the odds are stacked in favour of the short side at this point in time due to the bearish short-term trend.” He sees the next resistance level at 2,790 and support at 2,660 followed by 2,600. — Joan Ng