It seems like SIA share price is destined for an apocalyptic correction. On 16 May 2019, Singapore Airlines reported a record annual revenue of $16.3 billion for FY2018/19. However, net profit collapsed 47.5% to $683 million. Since the announcement of the results, SIA share price went into an epic free-fall to reach the current low of $9.25.
On the basis of the current bearish run, it appears to me that SIA share price is likely to be bearish in the coming weeks. In my opinion, the correction of SIA share price could be an opportunity for long-term investors to accumulate this counter. The 5-year beta for SIA share price is only 0.43. This means that while in the short-term, SIA share price can be pretty volatile, in the long run, this counter is actually quite stable. The average 3-month volume is 23 million and Temasek Holdings shareholdings in SIA amounted to 54.9%. Based on this data, SIA should be a good stock to hold for the long-term.
The correction in SIA share price is attributed to the plunge in net profit. However, it is important to put things into context. SIA had an exceptionally good FY2017/18 because oil prices were trading at the range USD45 – 60 per barrel and total fuel costs amounted to $3.9 billion. Because of that, SIA was able to achieve a net profit of $1.345 billion for that year. Fast forward a year later, oil price has surged, thereby wrecking havocs to the bottom-line.
Notwithstanding the dismal net profit for FY2018/19, there is a silver lining from the latest financial performance. In my view, I do think that the coming months should see SIA share price facing plenty of headwinds. Then again, fortune favours the brave. Investors who set the right entry and exit price should be able to buy low and sell high. Are you ready for the ride?
SIA share price lifted by tailwinds
If investors looked back, SIA share price often peaked during the period of May, and then subsequently went into severe correction modes. In early 2018, SIA share price surged from $10.70 in January 2018 to $11.70 in May 2018. Then the shares crashed to a low of $9.20 in October 2018. Likewise in 2017, SIA share price surged from $9.70 in January 2017 to $10.70 in May 2017. Again, the counter fell to $10 in September 2017. SIA share price went through similar pattern in 2015 and 2016. Based on the data, it is likely that SIA share price will enter into the seasonal decline mode.
As a premium airline, SIA share price will always be dictated by oil price movements, no matter how effective it’s hedging strategies are. However, it seems that CEO Goh Choon Phong has managed to [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]
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