FY3/14 net profit was 5% below our and consensus expectations. The final DPS of 6 Scts was a disappointment, below our 7.5 Scts estimate, leading to a dividend payout of only 89% in FY15 vs. 133% in FY14. The airframe segment continued to record operating losses in 2H15 due to negative operating leverage from lower heavy checks. We cut our FY16-17 EPS by 7% for lower revenue, leading to a lower DCF-based (7.8% WACC, 1% LTG) target price. SIE is trading at 22x CY16 P/E, a premium over its relevant peers, STE (18x) and SATS (17x). SIAE remains a Reduce given the potential de-rating catalyst of a slower-than-expected recovery due to airlines' delayed maintenance.