Highlights

• SIA’s 2QFY27 earnings of S$210m missed our guided range of US$230m-370m, driven by weaker-than-expected pax yields. 2QFY27 would have been a bigger miss if we exclude Air India’s one-off accounting gains.
   
• Despite having pulled back from recent peaks, elevated jet fuel prices are likely to still weigh on SIA’s 3Q/2HFY27 performance, leading to our forecasted 33%/29% yoy drop in SIA’s 3Q/2HFY27 earnings respectively.
   
• SIA’s current valuation (at 1.40x FY27F P/B, or 1.6SD above historical mean) appears to have priced in an imminent resolution to the Middle East unrest, although significant uncertainties remain.
   
• Maintain SELL; target price raised to S$6.65 (based on 1.29x FY27F P/B).
   

Analysis

• 2QFY27 results missed our expectations… Singapore Airlines’ (SIA) 1HFY27 reported net profit dropped 44% yoy to S$134m. Despite having improved yoy and qoq from 1QFY27’s and 2QFY26’s very low bases, 2QFY26 net profit of S$210m was below our guided range of S$230m-370m.
   
• …due to lower-than-projected pax yields. Pax yields rose 12.2% yoy, below our projected 17.0% increase, as fuel cost pass-through to customers came in lower than our expectations. Cargo yields rose 22.3% yoy, broadly in line with our forecast, while non-fuel opex/ATK increased 3.7% yoy, also in line. Consequently, 2QFY27 operating profit of S$464m (+16.4% yoy) was below our projected range of S$565m-745m.