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Author: kimeng   |   Latest post: Tue, 22 May 2018, 10:06 AM

 

SIA Engineering Company: Core FY18 Within Expectations

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SIA Engineering Company Ltd’s (SIAEC) 4QFY18 revenue declined 6.4% YoY to S$276.4m due to lower airframe and component overhaul services (ACS) and fleet management (FM) revenue.

Operating expenses fell 5.8% YoY to S$255.8m largely due to decrease in staff and subcontract costs.

Consequently, stripping out one-off items including the S$14.3m gain recognized in 4QFY18 on the sale of the Group’s shares in an associated company, Asian Compressor Technology Services Co Ltd, coupled with a 7.4% decline in share of profits of associated and JVs to S$25.0m, SIAEC’s 4QFY18 core PATMI fell 5.7% YoY to S$43.3m.

For FY18, revenue fell 0.8% to S$1094.9m while operating expenses declined 1.3% to S$1018.5m largely due to lower staff (absence of S$21.3m provision in FY18) and subcontract costs but partly offset by exchange loss.

However, shares of profits of associated and JVs grew 13.8% to S$109.8m mainly driven by higher contributions from the engine and component centres.

Consequently, stripping out the one-off items recognized in 4QFY18 and in FY17, FY18 core PATMI rose 1.6% to S$173.3m, and formed 103% of our FY18 estimate.

Pending an analyst briefing later, maintain BUY but put our S$3.70 FV under review.

Source: OCBC Research - 16 May 2018

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