SIA Engineering Company's (SIAEC) FY14 results came in within our expectations. FY14 revenue increased 2.7% from S$1.15b to S$1.18b, forming 101.4% of our forecast. However, lower margins resulted in PATMI declining 1.6% to S$266m, making up 99.1% of our forecast. The S$44.0m increase in expenditure (+4.3%) came mainly from higher staff costs, sub-contracting and material costs. This is partly compensated by associates’ and JVs’ share of profits increasing steadily by 8.3% to S$162.6m, representing 61% of the SIAEC’s net profit. The main contributors were the engine repair and overhaul centres which accounted for S$125.0m. We maintain HOLD on SIAEC but keep our FV estimate of S$4.77 under review pending an analyst briefing later.

Source: OCBC Research - 6 May 2014