CGS-CIMB Research analyst Lim Siew Khee has upgraded SIA Engineering Company (SIAEC) from ‘hold’ to ‘add’, recommending a switch from Singapore Airlines (SIA) to SIAEC on ‘more palatable valuations’ as travel prospects improve.

“We see SIE as a cheaper proxy for the border reopening theme as it is trading at -1.5 standard deviation from mean since 2011, relative to SIA’s one time FY2022 ending March P/BV (or +1 standard deviation above mean on adjusted FY2022 book value per share),” she writes in an April 8 research note.

Her higher target price of $2.85 from $1.78 previously is underpinned by a raised P/BV multiple up to 2 times, close to the average one-year trading band pre-Covid-19 to reflect borders reopening.

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