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If SIA’s profits returned to pre-Covid levels tomorrow, is it a “BUY” at today’s price?
By The InvestQuest  •  September 28, 2020
Difficulty: Moderate 1) Overview of Singapore Airlines Group (SIA) 2) Analysts are currently bearish on the stock 3) But if SIA‘s profits returned to Pre-Covid levels tomorrow, would it be a “BUY” at today’s price? (Our Answer is No.) Appendix 1: SIA Group’s Operating Statistics Appendix 2: Increased debt may cost SIA $45m in interest expense Appendix 3: SIA’s Fuel Hedging Policy and Historical Gains/Losses Appendix 4: What’s the risk of a Miles Devaluation? Likely low… The InvestQuest’s View

Even in 1) the most optimistic of scenarios where SIA’s profits revert back to Pre-Covid levels and 2) at today’s low share price, P/E multiples are not compelling in our view. We would prefer to have a larger margin of safety, given that P/Es from the bullish scenarios are not much of a discount from SIA’s historical P/E of 16.6x. Furthermore, additional risks need to be

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By The InvestQuest
The Invest Quest was founded on the premise that the average investor makes sub-optimal investment decisions as a result of information asymmetry. It is our hope that this platform will narrow the information gap against the “smart money”.
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