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Fall in SIA’s passenger traffic is bad news for SATS, SIA Engineering

Benjamin Cher
Benjamin Cher9/16/2016 11:48 AM GMT+08  • 2 min read
Fall in SIA’s passenger traffic is bad news for SATS, SIA Engineering
SINGAPORE (16 Sept): SIA’s surprise decline in passenger traffic is leading UOB Kay Hian to cut profit forecasts by 22% while issuing a “maintain market weight” call on the aviation sector.
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SINGAPORE (16 Sept): SIA’s surprise decline in passenger traffic is leading UOB Kay Hian to cut profit forecasts by 22% while issuing a “maintain market weight” call on the aviation sector.

This weak performance has implications for SATS and SIA Engineering’s earnings if traffic through Changi airport is weakened, says UOB Kay Hian in Friday report led by lead analyst K Ajith. The analyst is recommending a “sell” call on SIA Engineering while suggesting investor top-slice holdings on SATS.

Ajith notes that the surprise decline in passenger traffic and carriage – 6.8% and 5.5% respectively – is SIA’s weakest August growth numbers in four years, with regional carrier SilkAir also posting a 2% on-year decline. While he rules out the Zika outbreak as a factor for the decline, there is uncertainty if the weak demand is due to competitive factors or general slowdown in traffic.

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