Singapore Airlines (C6L.SG) +0.1% at $15.30, rebounding slightly after two sessions of declines, despite posting a decline in December overall load factor to 69.8% vs November’s 70.1%. But a meagre volume of just 97,000 shares traded suggests investors would rather wait for the carrier’s fiscal 3Q results, due Jan. 28, before taking strong positions. 

UOB KayHian, which has a Hold rating and $15.90 target, says earnings growth hinges on yield improvement; notes SIA indicated it reinstated the all-business class daily flights to LA; “that suggests yields would have shown a on-quarter improvement.” But the house adds much of SIA’s recovery in profits for 1HFY11 was due to effective cost management, a surge in cargo traffic and yields. 

“The odds of further improvement in base yields remain low in the wake of a changing competitive landscape. Add to that an environment of firmer fuel prices and we see little reason to be positive on SIA aside from the immediate prospect of a bumper dividend payout.” The house makes no change to its estimates and suggests a $14.30 entry price (15% discount to its target).