SIA Engineering - CGS-CIMB Research 2024-02-12: Risk-Reward Turning More Attractive

SIA Engineering - Risk-Reward Turning More Attractive

SIA Engineering (SGX:S59) | SGinvestors.ioSIA Engineering (SGX:S59)
  • We upgrade SIA Engineering (SGX:S59) to ADD with a higher target price of S$2.70 (19.5x CY25F P/E), backed by a clearer earnings outlook and decent valuation (17x CY25F P/E).

3QFY24F EBIT likely returned to profitability

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  • SIA Engineering likely returned to profitability in 3QFY24F, with EBIT of S$1.9m (2QFY24: -S$0.3m, 3QFY23: -S$12.5m) though its stronger operating leverage was likely partially offset by elevated staff costs and FX losses.

Associates profit boost likely to be more apparent in coming quarters

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  • Given that ESA is the only engine MRO service provider in Southeast Asia that is part of P&W’s GTF network, we think the group is set to capture the bulk of repairs from affected airlines operating in the region; based on our analysis, ESA will likely service airlines from New Zealand, the Philippines, and Vietnam.
  • In our view, gradual easing of supply chain woes would drive engine induction volumes, and be a key driver of its associates’ FY25F profit growth (we estimate +13% y-o-y).

Healthy revenue growth should lift operating leverage

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Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @

Kenneth TAN CGS-CIMB Research | LIM Siew Khee CGS-CIMB Research | 2024-02-12

Read also CGS-CIMB's most recent report:
2024-02-15 SIA Engineering - Topline Strength Dragged By Forex Losses.

Price targets by 3 other brokers at SIA Engineering Target Prices.

Listing of research reports at SIA Engineering Analyst Reports.

Relevant links:
SIA Engineering Share Price History,
SIA Engineering Announcements,
SIA Engineering Dividends & Corporate Actions,
SIA Engineering News Articles


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