RESEARCH ALERT-HSBC upgrades Singapore Air to overweight

SINGAPORE Jan 10 (Reuters) - HSBC Global Research has upgraded its recommendation on Singapore Airlines Ltd (SIA) to overweight from neutral and raised its target price to S$12.50 from S$10.28.

STATEMENT:

HSBC said that after underperforming the MSCI index for Asia Pacific ex-Japan by 15 percent in the past three months, it believes that "compelling value has emerged" and that the downgrade cycle for the company has run out of steam as earning momentum starts to recover.

In addition, SIA is well-positioned due to strong connectivity of Singapore's Changi International Airport among other airports in Southeast Asia as well as the its importance for flights between Europe and Australia.

HSBC also cited SIA's solid balance sheet, which it described as "comfortably the strongest for an Asian airline." The company has estimated net cash of S$3.5 billion ($2.70 billion) in 2012, it added.

At 0225 GMT, SIA shares were up 0.7 percent at S$10.40. The stock fell around a third last year.

($1 = 1.2974 Singapore dollars) (Reporting by Mark Tay)