ST Engineering: The deliveries of new generation airframe and engines, as well as OEM’s after-sales service, were investors ‘top concerns during the one week NDR in Toronto and US.
Demand for airframe MRO is expected to be firm in the medium term, backed by ageing fleet, extended operational life of older aircraft on lower oil prices. Engine shop visits could surge by 2016, as maintenance cannot be deferred indefinitely. >50% of its major customers’ fleets are aged 5-20 years, requiring heavy maintenance.
Potential catalysts include sizeable contract wins in electronics and stronger MRO demand. CIMB maintains its ADD rating and TP of $3.93.
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