Company Coverage
SIA Engineering (SIE SP): 1QFY27: Strong Fundamentals Masked By Expansion-Related Gestation Costs; BUY For Medium-Term Growth
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
S$3.27
S$3.75
+14.7%
S$3.85
Analyst
Highlights
SIAEC’s 1QFY27 net profit S$40.3m (-6.1% yoy) was impacted by expansion-related gestation costs at its engine JVs, excluding which, SIAEC’s earnings would have grown about 10% yoy.
Fundamentals of all major business lines remained healthy.
We are positive on SIAEC’s recent business developments, including its new engine JV with Safran and MOU signed with Air India.
Investors should look beyond near-term earnings volatilities from gestation cost drags and stay invested for SIAEC’s medium-term growth potential.
Maintain BUY, with a slightly lower target price of S$3.75, still based on 21.2x FY28F PE (historical mean). SIA offers a fine 3.5-4.0% yield for FY27-28.
Analysis
Strong 1QFY27 underlying performance masked by gestation costs related to capacity expansion. SIA Engineering’s(SIAEC) 1QFY27 net profit of S$40.3m (-6.1% yoy) was slightly behind our projection, at 22% of our full-year forecast. 1QFY27 saw yoy lower earnings contribution from engine JVs/associates (down S$7.0m or 19.2% yoy), as one of its key engine MRO JVs, Singapore Aero Engine Services, incurred gestation costs for capacity expansion works. Excluding the gestation costs, SIAEC’s earnings would have risen about 10% yoy, by our estimate.
Highlights
SIAEC’s 1QFY27 net profit S$40.3m (-6.1% yoy) was impacted by expansion-related gestation costs at its engine JVs, excluding which, SIAEC’s earnings would have grown about 10% yoy.
Fundamentals of all major business lines remained healthy.
We are positive on SIAEC’s recent business developments, including its new engine JV with Safran and MOU signed with Air India.
Investors should look beyond near-term earnings volatilities from gestation cost drags and stay invested for SIAEC’s medium-term growth potential.
Maintain BUY, with a slightly lower target price of S$3.75, still based on 21.2x FY28F PE (historical mean). SIA offers a fine 3.5-4.0% yield for FY27-28.
Analysis
Strong 1QFY27 underlying performance masked by gestation costs related to capacity expansion. SIA Engineering’s(SIAEC) 1QFY27 net profit of S$40.3m (-6.1% yoy) was slightly behind our projection, at 22% of our full-year forecast. 1QFY27 saw yoy lower earnings contribution from engine JVs/associates (down S$7.0m or 19.2% yoy), as one of its key engine MRO JVs, Singapore Aero Engine Services, incurred gestation costs for capacity expansion works. Excluding the gestation costs, SIAEC’s earnings would have risen about 10% yoy, by our estimate.
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
S$3.27
S$3.75
+14.7%
S$3.85
Analyst
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