NEUTRAL retained on regional LCCs. Scoot, SIA's wholly-owned airline specialising in low-cost, long haul flights, has been in service since 4 Jun 2012 with its maiden flight to Sydney. We are unexcited by this development as it is an unproven model; even perceived market leader AirAsia X has not turned a cash profit since its inception back in 2007. We maintain our HOLD call on SIA with an unchanged target price of SGD11.15, pegged to historical mean P/B of 1.0x. This development will also not impact the LCCs in our coverage: AirAsia, Asia Aviation and Cebu Pacific.
Click here for full reportSource: Maybank Research - 5 July 2012