SIAEC

SIAEC: UOBKH has a conviction Sell with TP of $3.30. The house thinks that the pace of cost decline is unlikely to continue.

Further weakness expected because:
1) Revenue should remain lacklustre as older aircraft engines are being phased out and newer engines will only reach their maintenance cycles in 2-3 years’time.
2) Overcapacity in the region has led to continued losses in SIAEC’s repair and overhaul segment
3) Lofty valuation of 27.4x FY17F PE, presents downside risks given weak earnings prospect