SIA Engineering

SIA Engineering: Announced good set of results which was in-line. Rev at $272.4m, -0.2% yoy and qoq, while net profit at $71.2m, +7% yoy and +4.6% qoq, while operating margins at 12.5% was flat yoy.

Strong bottom-line was due to performance improved in the 2Q as share of profits from associated and JV Co’s grew 7.1% yoy and also due to a write-back of tax provision amounting to $3.1m.Group operating profit slipped 1.2% to $34m, due to the impact of the weaker greenback, offset by exchange gains of $7.1m from hedging and the revaluation of net US dollar-denominated assets.

Going forward, grp expects demand in the short-term to remain stable, although uncertainties in global mkts could hurt the aviation industry. Vigilance on cost and efficiency management will remain key priorities, while on the business side, broad range of services and the grp's network of joint ventures place grp in an advantageous position to continue to capitalise on growth opportunities. Co. has declared an interim div of 6c/share.

We note that grp’s balance sheet remains strong, with grp in a strong net cash position of $386.9m, and at current price, grp trades at an annualized 14.6x FY12 P/E, in-line with its historical average of 14.8x.