SIA Still Enjoys Recovery Story in Q3; Shares Fairly Valued

No-moat Singapore Airlines', or SIA's, third-quarter operation statistics for the fiscal year 2023 are largely in line with our expectations, reaching 78.3% of its prepandemic capacity. Although 78.3% is slightly lower than management's guidance of 81% by the end of 2022, as mentioned in our July 25 note, our capacity projection remains at 83% of its prepandemic capacity by March 2023. Furthermore, for the third quarter, we believe SIA is expected to continuously see a double-digit margin driven by high monthly passenger load factors, or PLF, and lower jet fuel costs. Given the share price rally since November 2022, without additional catalysts, we think SIA stock is fairly valued for now. Our fair value estimate is unchanged at SGD 5.30.