SIA Engineering’s (SIE) 1QFY3/2022 revenue of $125.3 million, up 9% q-o-q and up 6% y-o-y, was driven by higher flight activities, with group operating expenses at $128 million, down 7% q-o-q but up 13% y-o-y and an operating loss of $2.9 million, compared to an operating loss of $1.1 million in 4QFY2021.
Meanwhile, the share of profits of associates and JVs was $14.8 million, forming 39% of Lim’s FY2022F forecast. Key contribution was from the engine and component segment ($18.3 million), while the airframe and line maintenance segment turned in a lower loss of $3.5 million.
See also: UOBKH says ‘size matters’ on ‘overweight’ data centre REITs, but downgrades MINT to ‘hold’
Without the Job Support Scheme (JSS), SIA Engineering would have incurred a 1QFY2022 net loss of $24.1 million. “We believe 1QFY2022 net profit of $14.5 million could have also been lifted by a tax credit of an undisclosed amount,” adds Lim.
The company ended 1QFY2022 with a cash balance of $683.5 million, compared to $616 million in the previous quarter. Net cash as at 4QFY2021 was $606 million.
See also: OCBC Investment Research initiates ‘buy’ on Info-tech with target price of $1
At 1.5 times FY2022F price-to-book value (P/BV), SIA Engineering trades close to -1.5 standard deviations below its historical mean. “We believe downside risk is limited on the back of global vaccination rollout. We think that by December 2021 or early-2022, quarantine-free visits/vaccination certificates could be rolled out for selected countries that Singapore has established Air Travel Pass (ATP) arrangements with. While the passenger load could still be low in the initial stages, we think airlines restarting flights are likely to see their flights handled numbers jump,” writes Lim
For more stories about where the money flows, click here for our Capital section
As at 2.45pm, shares in SIA Engineering are trading 1 cent lower, or 0.48% down, at $2.07.
