16-6-2023 (SINGAPORE) Singapore Airlines (SIA) saw its shares fall after a 12-day winning streak, as investors chose to take profits. The stock started strongly, rising to an intra-day high of S$8.05 before gradually slipping throughout the rest of the trading day to as low as S$7.51. Eventually, it clawed back some ground to close 1.8% lower at S$7.77. In contrast, the Straits Times Index rose 0.53% to 3,260.03 points, buoyed by gains in large-cap firms such as the three local banks and the airline ground handler and food caterer SATS.
SIA shares have been on an upward trajectory since the beginning of the year as the air travel industry recovers. Recent weeks have seen the advance boosted after the national carrier announced a record annual profit due to strong travel demand. Last month, SIA announced a net profit of S$2.16 billion (US$1.63 billion) for the year ended Mar 31, rebounding from a loss of S$962 million a year earlier. The company also declared a final dividend of S$0.28 per share, a figure that market analysts described as “generous” and likely to “enhance investor sentiment”.
Since then, SIA’s stock has risen by nearly 30%. IG market strategist Yeap Jun Rong suggested that this “exponential” rise may have priced in much of the recovery, leading to concerns and a potential “near-term correction” in the airline’s stock. Yeap added that the sell-off from profit-taking activities could also be exacerbated by the steep increase in the share price. Morgan Stanley analysts also downgraded SIA from “overweight” to “even-weight”, noting that positive factors such as strong fundamentals and favorable fuel prices have already been factored in.
