S'pore Airlines - a Great Way to Fly Again?

Is Singapore Airlines (SIA) a great stock to invest in again? Let us see…

Fundamentally still a Great Company?

I have gravitated towards Technicals (TA) as charts and patterns allow me to visualise and make sense of price action easier. Fundamentals (FA) have me rather overwhelmed by the sheer amount of information to plough through. Luckily, found an FA site (simplywall.st) recently that uses radar charts and other infographics to give quick snapshot of a company investment profile, and I found helpful to decide if I want to delve deeper (not promoting its services, just sharing something novel, at least to me).

So, for SIA, their radar chart –called snowflake analysis– showed visually it has:

1. High Future growth prospect in next 1 to 3 years,
2. Stock price is under-Valued
3. Financial Health is improving
4. Past Performance was horrendously impacted, and
5. No Dividend pay-out in last 2 years with it plummeting into red due to COVID-19.

SIA - Snowflake Analysis (source: simplywall.st)

In figures, SIA share price is estimated to be trading at 73,5% below fair price of $20.73 (more of this later) and earnings is forecasted to almost double (+99.1%) per year in next 1-3 years.

SIA Current (1Apr) vs Fair Value (source: simplywall.st)

Entry and Target Price?

From Daily Chart, TA shows price has risen and now consolidate at first prior resistance level supported by all the major MA lines below. It should present a good price to enter long with confirmation of price breakout beyond $5.50-5.60.

SIA - Daily Chart and Price Targets

First target to aim for is $6, an ambitious +9.29% gain. It might be reachable as the $Straits Times Index(STI.SI)$ gain for 2021 was +13%. Even though we expect slower growth in 2022 with high inflation, energy cost, geopolitical and lingering pandemic headwinds, resumption of quarantine-free international travel might just be the tailwind for SIA and her aviation peers to propel upwards again.

The next target is quite a stretch to $8.8, almost +60% upside from current price for the medium term. Yet, it is still far below some analyst fair value estimate of $20.73. It is a stark reminder how devastating international travel disruptions has had on the fortune of this premier world-class carrier without a domestic market.

A Great Way to Fly?

So, looking at both Fundamentals and Technicals, there is certainly a case to take long positions in $SINGAPORE AIRLINES LTD(C6L.SI)$ currently.

Would it be a return of 'a great way to fly' for SIA following her tagline, with stock prices soaring higher? Or would her wings be clipped, and prices hamstrung at lower levels? Can’t wait to observe how the next 6 to 12 months would pan out…