For the year ended March, SIAEC generated revenue of 14.3% y-o-y to $1.42 billion, with earnings up 21% to $168.9 million.
SIAEC plans to pay a final dividend of 8.5 cents, bringing the full-year total to 11 cents. “Although manpower shortages and supply chain constraints have placed upward pressure on costs, we remain constructive on the broader maintenance, repair and overhaul (MRO) industry,” says Lim.
She believes that SIAEC is well poised to capture robust MRO demand given its investments into capacity expansion and capability development, as well as the continued growth of its portfolio of partnerships, including in India soon. However, “it may take some time to bear fruit given start-up costs and ongoing tariff uncertainty,” says Lim.
Similarly, Roy Chen of UOB Kay Hian, noting that SIAEC continues to proactively push for capacity, engineering capability and geographical expansion, has maintained his “buy” call.
See also: Analysts mixed on Keppel as CEO says he will divest property and rigs to offset M1
“Despite near-term bear gestation costs, the expansion projects should drive SIAEC’s medium-term growth,” says Chen, who expects a steady financial performance in FY2027, as SIAEC’s gestation costs are likely to have stabilised and then taper off in FY2028.
Having said that, Chen has lowered his target price to $3.85 from $3.92 as he tweaked his net interest income estimates for the company.
Raymond Yap of CGS International has also lowered his target price. Yap is still valuing the company at an eight times FY2025 earnings multiple, but he has reduced his FY2027 earnings estimates by 8% due to concerns about higher operating costs. As such, from $4 earlier, Yap now figures this counter is worth $3.80.
See also: Maybank upgrades Thai Beverage on attractive valuations and cyclical recovery
Specifically, Yap points out that the ongoing war in Iran has increased diesel costs for SIAEC’s heavy vehicles used at airports, which it cannot pass on to its line maintenance customers.
“Cuts in airline capacity deployment due to high jet fuel prices have also reduced line maintenance revenues, including those for SIAEC’s Middle East airline customers, which are additionally affected by sporadic airspace closures,” he warns.
On the other hand, Yap, citing SIAEC’s management, notes that airlines that typically send their aircraft to undertake MRO work in the Middle East have “opened conversations” with the company about “potential future business”.
“SIAEC also highlighted that its base maintenance slot bookings by its airline customers have not been rescheduled as these slots are in short supply. This means that the overall near-term impact of the war on SIAEC is limited, but there are longer-term positives,” says Yap.
