Smooth ride for Singapore Airlines

THERE are few companies that can tell investors the near-term outlook is 'dismal', throw in a profits warning and not see its shares tumble. State-linked Singapore Airlines is one that can.

The region's premier carrier saw its shares advance five cents to S$9.40 today after it showcased figures for the year to March late yesterday.

The numbers - a 69% jump in net profit to S$1.07bn (£379m) - covered a period before the killer Sars virus got into its stride, so the focus was on the outlook.

Singapore Airlines said this quarter 'will almost certainly show a loss' despite moves to slash capacity - nine planes have been parked - and introduce a raft of other measures to pare costs.

JP Morgan Securities, which has a neutral rating on the stock, told clients today it expected red ink this month and next as the company 'faces its worst crisis on record'.

Investors' continued faith appears founded on the airline's strong potential for recovery - whenever that comes. Its balance sheet is robust, its brand is strong and, in normal times, it sells seats at premium rates.

The stock has already climbed off a low of S$8.30 this year, which was not quite as deep a drop as its trip below S$8 in the aftermath of 9.11.

Singapore's Straits Times index was up 10.38 points, or 0.8%, at 1301.11, aided by a 15-cent gain in banking group DBS to S$9.25, a rise of 1.7%.

US Federal Reserve chairman Alan Greenspan may have advised Japan's policymakers to let more companies fail, but the latest bailout, Resona, gained further ground.

Japan's fifth-largest lender added nine yen, or 14.7%, to 70 yen on reports that the government-would not convert its preferred shares, acquired in Resona's two founder banks - Daiwa and Asahi - in the late 1990s, into common stock.

It now trades well ahead of levels seen before last weekend's £12bn State rescue. Resona's head of steam aided other lenders, including Mizuho Financial, which added 3100 yen, or 4.4%, to 73,500. The Nikkei 225 Average closed up 33.15 points at 8051.66.

In South Korea, the travails of SK Global, trading arm of the SK conglomerate, took centre stage. Oil refiner SK Corp, up 360 won, or 4%, to 9390, said it would convert its SK Global debt into equity.

SK Global, which recently admitted accounting fraud worth £735 million, rose 95 won to 2450, a 4% advance.

SK Corp has been the target of aggressive stakebuilding by overseas fund Sovereign Asset Management, which has opposed a bailout for SK Global. The benchmark Kospi index fell 5.19 points or 0.9% to 595.38 after the release of downbeat first-quarter economic growth data.

Malaysia's lead index was little changed after a rate cut - the first in nearly two years - but official moves to aid Sars-hit businesses did help some.

As part of a stimulus package, the government said tourist sector borrowers would get relief from banks, and hotels would get cheaper electricity bills.

Leisure group Genting was up 20 sen, or 1.6%, at M$20.60 and casino operator Resorts World added 10 sen, or 1.3%, to M$8.10. The benchmark Kuala Lumpur Composite index was off just 0.74 point at 639.63.

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