SIA ENGINEERING CO LTD
S59.SI
SIA Engineering Company Ltd - Bottom line boosted by one-offs
- S$271.6mn revenue missed our expectations of S$285.6mn by 4.9%; met 23.7% of consensus full year expectations of S$1.146bn.
- S$41.7mn adj. PATMI missed our expectations of S$46.2mn by 9.7%; met 23.9% of consensus full year expectations of S$174.4mn.
- Overall business anaemic with headline PATMI boosted by non-recurring gains.
Reported PATMI includes several one-offs
- Reported PATMI of S$198.4mn includes three one-offs. There is S$141.6mn gain from divestment of the Group's 10% stake in Hong Kong Aero Engine Services Ltd (HAESL) and special dividend of S$36.4mn from HAESL's divestment of its 20% stake in Singapore Aero Engine Services Ltd (SAESL). Total gains from divestment during the quarter was S$178.0mn.
- In addition, there was a S$21.3mn provision made on Staff costs expense in relation to the profit-linked component of staff remuneration arising from the gain on divestment of HAESL.
Anaemic overall: uninspiring revenue; associates and JVs continue to be a drag
- We were expecting modest revenue growth, after two previous consecutive quarters of y-o-y revenue growth. Instead, slump in the fleet management revenue outpaced contribution from the other business segments.
- Contribution from Associates and JV also did not meet our expectations. Our disappointment was mainly due to the contribution from JVs, which was 22.1% lower y-o-y, as we were expecting some uptick in engine jobs to start trickling in.
Downgrade to "Reduce" rating with lower target price of S$3.39 (previous: S$3.51)
- Disappointing set of results have led us to trim our estimates on contributions from JVs, resulting in 4.3%/10.6% lower FY17/FY18 recurring PATMI.
Richard Leow CFTe
Phillip Securities
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http://www.poems.com.sg/
2016-07-27
Phillip Securities
SGX Stock
Analyst Report
3.39
Down
3.51
