Wednesday, February 6, 2013

SIA Engine

SIA Engine: 3Q13 result was in-line. Rev at $287.2m, -8.3% yoy, while net profit at $67m, +5.5% yoy. Result brings 9M13 rev to $863.2m, +1.1% yoy and net profit to $204.2m, +0.7% yoy. Weaker top-line was on back of lower fleet mgt and project rev. However, expenditure fell by $28.0m or 10.2%, primarily from decreases in subcontract services, material costs, and an exchange gain during the qtr. Going forward, grp expects its core business to remain stable in the last qtr of FY1313. Prevailing uncertainties in the world's major economies will continue to impact the aviation industry, and the grp will maintain its focus on cost control and productivity improvements. With the recent sharp rise in SIE’s share price, KE highlight the possibility of parent SIA taking advantage of the situation to issue SIE shares as in-specie dividends. Should SIE’s share price experience short-term weakness upon such an announcement, this could present an opportunistic entry point Ratings as follow: CIMB maintains neutral with $4.70 TP Maybank-KE downgrades to hold with $4.86 TP UOB Kay Hian maintains Buy with $5.20 TP

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