- SIA Engineering (SGX:S59)’s 1HFY26 results met our expectations – 1HFY26 revenue grew 26.5% y-o-y to S$729m, on the back of robust MRO demand as well as the new services agreements with SIA (SGX:C6L).
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- Together with a 21.7% y-o-y increase in share of profits of associated and joint venture companies to S$71.3m, offset by a one-time impairment charge of S$4m on an underperforming long-term contract and IT system implementation losses, group PATMI came in at S$83.3m, up 21.1% y-o-y.
Higher interim dividend of 2.5 cents.
- 1HFY26 basic earnings per share (EPS) of 7.45 Singapore cents constituted 50% of our initial full year forecast, in line with our expectations.
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Expanding to better capture long-term MRO demand.
- During the period, revenue from the airframe overhaul and line maintenance segment improved 15.7% y-o-y to S$503.9m, while that for the engine and component segment jumped 60.1% y-o-y to S$84.5m. SIA Engineering recorded a 2.6% y-o-y increase in the number of flights handled to 79,254.
- While the number of light checks performed at its Singapore base fell from 347 in 1HFY25 to 284, the number of heavy checks grew from 33 to 45. SIA Engineering is making steady progress expanding its capacity and developing capabilities to better capture long-term MRO demand, though higher-than-expected gestation costs remain a risk in the near term, in our view.
Higher Fair Value estimate of S$3.68.
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