With that, any positive outlook on the company is deemed to be “largely priced in,” in Lim’s view. The company, on July 22, reported a net profit of $42.9 million for the 1QFY2026 ended June 30, 29.2% higher y-o-y. Revenue also rose by 33.4% y-o-y to $358.4 million as demand for maintenance, repair and overhaul (MRO) remained “robust”.
The company’s results were largely in line with Lim’s expectations. The analyst has an FY2026 patmi estimate of $166.8 million while her full-year revenue estimate is at $1.69 billion.
In her report, Lim also noted that SIAEC is a “wildcard” when it comes to the likelihood of benefitting from the Equity Market Development Programme (EQDP) .
“On one hand, SIAEC is an off-benchmark industrial mid-cap that has returned strong earnings per share (EPS) growth in the past two years; EPS has not yet recovered to pre-pandemic levels, and we are forecasting this to grow at double-digit levels for the next two years,” she writes.
See also: CGSI downgrades SIAEC to ‘reduce’ on ‘adequate’ share price reflection
On the other hand, SIAEC’s valuations are starting to “look rich” after its recent share price rally.
“On a forward 12-month price-to-book (P/B) basis, the share is trading at 2.1 times, which is a tad above its 10-year historical average of 1.9 times. It is also not a dividend yield play, with LSEG (London Stock Exchange Group) consensus forecasting a forward 12-month dividend yield of just 2.9%, which is more than one standard deviation below its 10-year historical average,” she explains.
In the near-term, the analyst believes SIAEC’s share price may pull back on potential profit-taking activity and as the share goes ex-dividend on July 28.
In the long run, however, the market may reward SIAEC’s efforts if it is able to deliver on steady, consistent growth.
“Notwithstanding manpower shortages and supply chain constraints that have placed upward pressure on costs, we remain constructive on the broader MRO industry and especially engine maintenance, as operational issues (particularly from next-generation engines) necessitate more inspections and/or (unplanned) visits to the shop,” Lim writes.
SIAEC is still “well poised” to capture the “robust” MRO demand with its investments into expanding capacity and capability developments. SIAEC has also invested in the continued growth of its portfolio of partnerships as well as exposure to the up-and-coming India market. That said, the latter may “take some time for its efforts to bear fruits especially amidst the uncertainty driven by ‘Liberation Day’ tariffs”.
On the flipside, higher-than-expected start-up and development costs could be a downside risk for SIAEC. The first of its two hangars in Subang, Malaysia, is on track to begin operations by the end of 2025 while operations at SIAEC’s new line maintenance joint venture in Cambodia is also expected to take place in 2H2025.
Lim has maintained her fair value estimate at $3.50.
Shares in SIAEC closed 1 cent higher or 0.3% up at $3.31 on July 25.
