Singapore Airlines wins World’s Best Airline award but investors still see red

Singapore Airlines (SIA:SP) Fair value: S$13

Singapore Airlines (SIA:SP) Rating: Outperform

AirAsia (AIRA:MK) Fair Value: M$4.70

AirAsia (AIRA:MK) Rating: Outperform

 

10 April 2018, Asia Pacific – Singapore Airlines has just won TripAdvisor’s Best Airline in the World award for 2018, reaffirming what travelers have known for years – Singapore Airlines has a truly fantastic product from its state-of-the-art aircraft cabins to wonderful inflight dining and let’s not forget, the iconic Singapore Girl which has served as ambassador for SIA’s highly trained and ever helpful cabin crews.

Unfortunately, Singapore Airlines (SIA:SP)’s investors are clearly not enjoying the ride.

Although Singapore Airlines’ share price has appreciated by 8% in the past year, its share price performance has lagged behind most of the major airlines in Asia as well as the Straits Times Index and MSCI AC Asia Pacific Index in the past year. Singapore Airlines’ share price has also been fairly range bound in the past 5 years. In fact, SIA’s current share price of S$11 (as at the close of 10th April 2018) is the same as its share price on 6th April 1998 twenty years ago!

Chart: Major Asia Pacific airlines share price performance in the past 1 year

Chart: Major Asia Pacific airlines share price performance in the past 1 year

 

Chart: Singapore Airlines share price history in the past 20 years (1998 to 2018)

Chart: Singapore Airlines share price history in the past 20 years (1998 to 2018)

 

Singapore Airlines needs to apply its marketing magic to its digitalization roadmap

For a company that created Singapore’s first world class brand and arguably wrote the book on modern airline marketing; SIA is surprisingly coy about its digitalization/data monetization efforts. We believe that SIA has the deepest and most comprehensive digitalization program in the airline industry but to date, there has been no real unveiling of SIA’s digitalization roadmap with investors left guessing.

Our earlier report:

Singapore Airlines Embraces Passenger Data Monetization to Escape Value Trap Label

By contrast, Asia’s rock star airline entrepreneur Tony Fernandes has been anything but coy when it comes to discussing AirAsia’s digital wallet, BigPay and laying out a roadmap whereby AirAsia will move into foreign exchange, remittance and even money lending for entrepreneurs. See our previous report on this:

Our earlier report:

More upside as AirAsia (AIRA:MK) pursues Big Data monetization

 

Perception is Reality

In all fairness, AirAsia (AIRA:MK) is run by its founder, Tony Fernandes. As is typical of founders of successful companies, Tony Fernandes is accorded much leeway within AirAsia and can essentially lead the company as he sees fit. Singapore Airlines, on the other hand, has different power centers and baggage that comes along from its longer history and status as one of Singapore’s most cherished GLCs (Government Linked Corporations). Investors are acutely aware of this and naturally, questions abound whether SIA is serious about its digitalization/data monetization efforts.

If investors are to accurately value Singapore Airlines’ digitalization efforts, they will need a lot more information and assurances from top management as to where SIA is truly headed. 

 

Related Reports: 

Singapore Airlines Embraces Passenger Data Monetization to Escape Value Trap Label

 

More upside as AirAsia (AIRA:MK) pursues Big Data monetization

 

BigPay, Grab Financial just the start of Transport’s jump onto Fintech bonanza in Asia

 

Are airlines finally getting serious about Tech or is it just ‘Hot Air’?

 

Airlines are sitting on US$100 Billion Inflight Big Data goldmine

 

Singapore Airlines can unlock value by merging SIA Engineering w/ ST Aerospace to form MRO Powerhouse


Singapore Airlines Initiation Research Report 2017: Will SIA be a “sexy” stock again?
 

 

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