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Can SIA's share price soar to its five-year peak again?
It hit $12.65 per share in 2015.
Analysts at CIMB are analysing whether Singapore Airlines can hit its share price peak of $12.65 again and they are noting some factors that hinder the possibility.
According to Raymond Yap, the airline reached its peak at the beginning of 2015, as investors expected SIA to perform better after the crash in oil prices.
"The yoy improvement in earnings did in fact materialise, but lasted for only six months between Oct 2015 and Mar 2016, as competitor airlines cut fares and business travel demand remained weak, thus the fuel cost savings were handed over to passengers," Yap said.
He cited that the five-year peak may not be achieved that peak due the fiercely competitive environment.
"This time around, SIA is unlikely to enjoy the uplift from lower oil prices, as oil prices are likely headed up, in our view, albeit modestly," Yap said.
He expounded, "Also, we believe that the banking and oil and gas sectors, which are the bedrock of SIA’s premium class demand, are still in cost-cutting mode and therefore unlikely to provide a significant uplift to business-class demand."
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