- 4Q20 PATMI was a loss compares against the profit guidance of S$15mn to S$20mn. Earnings was negatively impacted by S$22mn worth of impairments and government grants to be recognised over 11 months.
- IATA forecast of full recovery in air traffic only in 2023 is the baseline assumption.
- Downgrade to SELL from NEUTRAL with a lower target price of S$1.95. We benchmark our valuations to P/B average of 1.35x during the global financial crisis in 2009. The outlook ultimately depends on the trajectory of the virus and even the ability to find an effective treatment for this pandemic. The path to recovery for aviation will be long. Profitability will be elusive, and the focus will be on the liquidity of the company.