Company Overview
SIA Engineering Co. Ltd is a leading aviation maintenance, repair and overhaul (MRO) services provider operating across engine and component maintenance, as well as airframe and line maintenance segments. The company serves the Southeast Asian aviation market through its extensive network of facilities and strategic partnerships.
Strong Financial Performance Drives Rating Upgrade
Phillip Securities Research has upgraded SIA Engineering Co. Ltd to BUY from ACCUMULATE, setting a target price of S$4.06, down from the previous S$4.14 due to share price weakness. The research house rolled forward financials and reduced the price-to-earnings multiple from 26x to 25x to account for heightened sector-wide risks from the US-Iran conflict.
The company delivered robust results for 2H26/FY26, with profit after tax and minority interests (PATMI) rising 20.9%/21.0% year-on-year to S$85.6 million/S$168.9 million, representing 47.8%/94.4% of Phillip Securities’ FY26 estimates. This strong performance was primarily driven by a 22.5% surge in associates and joint venture income during FY26.
Key Positives Supporting Growth Trajectory
The standout performance came from associates and joint venture earnings, which rose 22.5% year-on-year to S$145.3 million. The engine and component segment was the primary driver of this growth, increasing 23.1% to S$139.2 million, supported by higher engine repair deliveries, 20% higher engine inductions, and doubled test facility capacity.
The airframe and line maintenance operations also contributed positively, generating S$6.1 million (+10.9%) supported by stronger heavy check volumes and a 3.3% increase in flights handled at Changi Airport.
Operational Challenges and Gestation Losses
Despite the strong overall performance, gestation losses in subsidiaries persist as a headwind. These losses widened significantly to S$16.1 million in FY26 from S$2.0 million in FY25, weighing on the airframe and line maintenance segment. Base Maintenance Malaysia’s Subang heavy check facility commenced operations in November 2025, with its second hangar not expected to be operational until 2H27. Additionally, TIA Engineering’s Cambodia line maintenance operations began in September 2025, with operations expected to remain below full capacity.
Future Growth Drivers
Looking ahead, Phillip Securities Research identifies several key growth catalysts: SAESL engine capacity is set to increase 33% to 400 engines per annum by 2028, new Pratt & Whitney GTF engine-related coating capabilities in 2027 to capture elevated shop visit volumes, and expansion of landing gear and airframe maintenance capacity across Southeast Asia.
Frequently Asked Questions
Q: What was SIA Engineering's PATMI performance for FY26?
A: PATMI rose 21.0% year-on-year to S$168.9 million in FY26, representing 94.4% of Phillip Securities Research's estimates.
Q: What drove the strong associates and JV performance?
A: Associates and JV income increased 22.5% to S$145.3 million, primarily driven by the engine and component segment which rose 23.1% to S$139.2 million due to higher engine repair deliveries.
Q: What is Phillip Securities' new rating and target price?
A: The research house upgraded SIA Engineering to BUY from ACCUMULATE with a target price of S$4.06, reduced from S$4.14.
Q: What are the main operational challenges facing the company?
A: Gestation losses in subsidiaries widened to S$16.1 million in FY26 from S$2.0 million in FY25, primarily affecting new facilities in Malaysia and Cambodia that are still ramping up operations.
Q: What are the key growth drivers for the future?
A: Future growth will be supported by SAESL engine capacity increasing 33% to 400 engines per annum by 2028, new Pratt & Whitney GTF coating capabilities in 2027, and expanded maintenance capacity across Southeast Asia.
Q: How did the airframe and line maintenance segment perform?
A: The segment contributed S$6.1 million (+10.9%), supported by stronger heavy check volumes and a 3.3% increase in flights handled at Changi Airport.
This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst.
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