Updated SIA DCF

Introduction:

Due to the unsatisfactory pricing in my previous DCF where I obtained a price of $0.45 for SIA, I had decided to implement an additional methodology of Valuation using Comps. My rationale is that Airlines are usually operating out of razor thin margins due to non-differentiated offerings so very little is reinvested to grow Future Free Cash Flow and pay back to investors. However, the airline industry is also a unique one where the product it offers is indispensable, so Airlines are usually government backed so I think in a traditional DCF it does not consider the safety net provided by the government that boosts intrinsic value. 

Comparable:

My main criteria for picking comparable companies are Market Cap, Revenue size and they must be government backed/owned OR minimally were favored to receive government help. In the end, I've found 6 other companies that are relatively close to SIA. Choosing China Southern, China Eastern, United Airlines, Lufthansa and ANA. 

Assumptions:

1) Share price taking 6 Month Average.
2) Only Cash + Marketable Securities are taken as Cash.
3) All interest bearing debt are taken as Liability.
4) Financial results used are as updated as possible.
5) Multiples are based on FY-22 OR as updated results as possible.

Conclusion:

Due to the Airline Industry being overturned by Covid-19 and the aforementioned issue with the Airline Industry. This meant that Net Income was mostly negative for a lot of companies so Revenue was used as a multiple instead.

Because SIA is considered a luxury airline and it's a top performer airline meaning it's well-known and has a large branding it wouldn't be an understatement to say that SIA is a top airline close to the 75th Percentile.

I decided to use a 40-60 weightage of the implied price for Median and 75th Percentile due to the reason above, meaning that I believe SIA is better than the Median but may not be as good as the 75th Percentile. 

The price per share I got from Comps was $6.55.

I wasn't sure of the exact weightage I should give to the price per share of Comps and DCF.
So I assume that during the peak of Covid-19, the market only priced in the safety provided by the government.
Whereas just before Covid-19 the market priced in the safety and growth prospect which can be picked up by my DCF.

Pre Covid-19 : $6.31
Bottom Covid-19: $3.39
So the safety net provided by government accounted for 53% of the valuation.

The weightage of Price per share from Comps is 53% and 47% from DCF. Final Price per share is $3.68 


 Football field analysis for simpler visual representation of the weightage.

Picture of my Excel: https://imgur.com/a/2IC1Xua

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