Company Update: SIA Engineering Co. Ltd (SIE SP/ S59.SI)
Company Update: 23 May 2025
Continued strength in flight activities
- Flight recovery nearing pre-Covid levels. SIAEC reported that total flights handled by the company’s line maintenance business reached 97% of pre-COVID level at the end of FY24/25. Flights handled in the 4Q25 caught up to 99% of pre-COVID volume. Increased flight activities contributed to a higher demand for aircraft maintenance, repair, and overhaul (MRO) services. This uptrend is expected to continue as more airlines ramp up flight schedules, alongside the arrival of the summer travel season.
More upcoming revenue sources
The company recently incorporated TIA Engineering Services Co. Ltd to provide line maintenance services at Cambodia’s new Techo International Airport. Operations are currently expected to commence in July 2025, extending the company’s line maintenance network to 36 airports in 9 countries. Operations at the group’s Base Maintenance Malaysia Sdn. Bhd. (BMM), a wholly owned subsidiary under SIAEC, are also expected to begin in 2H25, with one hangar operational in 2H25, and another in 1H26. These activities are likely to positively contribute to the company’s topline.
FY24/25 financial results
SIAEC reported revenue of S$1,245.1mn for FY24/25, up 13.8% YoY, compared to S$1,094.2mn in FY23/24, as the company continues to benefit from the recovery of demand for aircraft MRO services. The company also reported a FY24/25 operating profit of S$14.6mn, compared to an operating profit of S$2.3mn in FY23/24. Group profit after tax came in at S$141.6mn in FY24/25, up 16.0% YoY, compared to S$97.1mn in FY23/24, largely attributed to a higher share of profits of JVs and Associated companies.
Valuation & Action
We maintain an OUTPERFORM recommendation and increase our TP to S$2.83, representing an upside of 10.2% based on Discounted Cash Flow (DCF) valuation, with a terminal growth rate of 2.0% and a WACC of 8.6%.
Risks
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, dampening SIAEC’s revenue. The company is also subject to translation risk as the company’s transactions with its customers are denominated in several different currencies
.
