SIA Engineering Company Ltd’s (“SIAEC”) 3QFY16 revenue came in largely in-line with our expectation, as revenue rose 3.7% YoY to S$275.2m on higher fleet management and line maintenance revenue. Operating expenses were slightly higher by 2.2% to S$246.2m, on increases in material and staff costs, mitigated by a decline in other expenses.
 

The share of profits from associated and JV companies increased 31.2% to S$33.2m mainly due to onetime restructuring gains, including profit from the sale of facilities. As a result, PATMI came in 6.7% YoY higher at S$49.4m.

However, we expect its outlook to be fairly muted, due to lower heavy maintenance checks as a result of improved airworthiness and longer maintenance cycles for both aircraft and engines, and we are keeping our forecasts unchanged for now. Maintain HOLD rating with the same fair value estimate of S$3.70.

Source: OCBC Research - 2 Feb 2016