KGI Research Singapore

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Company Update: SIA Engineering Co. Ltd.

Company Update: 20 May 2024

Benefitting from the recovery of flight activities

Strategic Partnership with Air India. SIA Engineering (SIAEC) recently announced a strategic partnership with Air India to develop Air India’s BM facilities in Bangalore, India. Under this partnership, SIAEC will collaborate with Air India on the planning, construction, development, and operationalisation of these facilities.

Final dividend.

The company declares a final FY24 dividend of 6 SG cents per share. This brings the total dividend to 8 SG cents per share for FY24, indicating a total dividend yield of 3.4% for FY24.

Continued flight recovery.

SIAEC saw total flights handled by the company’s line maintenance business reaching 94% of pre-COVID level as of March 2024. The increase in flight activities contributed to an increased demand for aircraft maintenance, repair, and overhaul (MRO) services. This recovery is expected to reach and surpass pre-pandemic levels in the next financial year as more airlines ramp up flight schedules, alongside more visa-free travel agreements between countries.

Valuation & Action

We maintain an OUTPERFORM recommendation with an unchanged TP of S$2.59, based on Discounted Cash Flow (DCF) valuation, with a terminal growth rate of 2.5% and a WACC of 8.49%.


SIAEC’s primary risk is associated with global flight activities, a key revenue driver for SIAEC. The resurgence of a
pandemic, the emergence of a new pandemic, natural disasters, or ongoing geopolitical tensions could significantly impact and reduce flight activities, thereby dampening SIAEC’s revenue.

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