UOBKH downgrades SIA to ‘sell’ as jet fuel price nears all-time high
Brokerage is ‘largely neutral’ on Air India’s US$1.5 billion top-up request
UOB Kay Hian has reduced its rating on Singapore Airlines (SIA) to a "sell" due to a recent increase in Middle East tensions and subsequent rise in jet fuel prices. The brokerage firm pointed out that the re-escalation in Middle East tensions led to drone attacks on a key Saudi pipeline and postponed planned talks between Gulf Arab states and Iran.
This resulted in a significant hike in jet fuel prices, with Brent crude oil at about US$105 a barrel and US crude oil at US$101 a barrel as of Friday. Due to the soaring jet fuel prices, reaching nearly US$200 a barrel, UOBKH slashed SIA's 2027 and 2028 earnings forecasts by 21% and 5%, respectively. The brokerage also cut its price target for SIA shares from S$6.71 to S$6.16.
UOBKH noted that while SIA's 40-50% fuel hedging position might offer some protection, its earnings outlook remains vulnerable to further fuel-price volatility.
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Also reported by 1 other outlet
- UOBKH downgrades Singapore Airlines to ‘sell’ on jet fuel price surge businesstimes.com.sg
