SIA Engineering Company's (SIAEC) 9MFY13F results were slightly below our expectations. Revenue increased by 1.1% to S$863.2m, chiefly due to an increase in materials and line maintenance revenue. Operating profit stayed roughly flat (+0.1% YoY) at S$97.2m. Share of profits from associated and JV companies increased by 0.3% to S$118.8m, representing a contribution of 51.5% of the group's pre-tax profits. PATMI was up 0.7% YoY to S$204.2m. This formed 72.6% of our previous FY13F estimate of S$281.4m, which we now reduce to S$274.0m. Still using a P/E peg of 17.1x and our basic EPS forecast of 25.6 S cents for 4QFY13F-3QFY14F, we reduce our fair value estimate from S$4.48 to S$4.38 and maintain our HOLD rating on SIAEC.
Reduce FY13F PATMI to S$204.2m
SIA Engineering Company's (SIAEC) 9MFY13F results were slightly below our expectations. Revenue increased by 1.1% to S$863.2m, chiefly due to an increase in materials and line maintenance revenue. Expenditure climbed 1.3% to S$776.0m, mainly due to higher staff costs. Operating profit thus stayed roughly flat (+0.1% YoY) at S$97.2m. Share of profits from associated and JV companies increased by 0.3% to S$118.8m, representing a contribution of 51.5% of the group's pre-tax profits. PATMI was up 0.7% YoY to S$204.2m. This formed 72.6% of our previous FY13F estimate of S$281.4m, which we now reduce to S$274.0m. Assuming a payout ratio of 85% of FY13F PATMI, we estimate a dividend yield of 4.2%.
Operating profit margin increases 1.8 ppt to 11.2%
For 3QFY13, revenue decreased by 8.3% to S$278.2m, primarily due to lower fleet management and project revenue. Expenditure fell by 10.2% to S$247.0m from decreases in subcontract services and material cost and an exchange gain. Operating income thus rose 9.9% YoY to S$31.2m. Share of profits from associated and JV companies declined 1.7% to S$40.0m, representing a contribution of 52.7% of the group's pre-tax profits. PATMI rose 5.5% YoY to S$67.0m.
Stable 4QFY13 likely
Management guides that the group's core business is expected to remain stable for the last quarter of FY13. The aviation industry will continue to be impacted by uncertainties in the major economies of the world. The group will maintain its focus on cost controls and productivity improvements.
Maintain HOLD
Still using a P/E peg of 17.1x and our basic EPS forecast of 25.6 S cents for 4QFY13F-3QFY14F, we reduce our fair value estimate from S$4.48 to S$4.38 and maintain our HOLD rating on SIAEC.
SIA Engineering Company's (SIAEC) 9MFY13F results were slightly below our expectations. Revenue increased by 1.1% to S$863.2m, chiefly due to an increase in materials and line maintenance revenue. Expenditure climbed 1.3% to S$776.0m, mainly due to higher staff costs. Operating profit thus stayed roughly flat (+0.1% YoY) at S$97.2m. Share of profits from associated and JV companies increased by 0.3% to S$118.8m, representing a contribution of 51.5% of the group's pre-tax profits. PATMI was up 0.7% YoY to S$204.2m. This formed 72.6% of our previous FY13F estimate of S$281.4m, which we now reduce to S$274.0m. Assuming a payout ratio of 85% of FY13F PATMI, we estimate a dividend yield of 4.2%.
Operating profit margin increases 1.8 ppt to 11.2%
For 3QFY13, revenue decreased by 8.3% to S$278.2m, primarily due to lower fleet management and project revenue. Expenditure fell by 10.2% to S$247.0m from decreases in subcontract services and material cost and an exchange gain. Operating income thus rose 9.9% YoY to S$31.2m. Share of profits from associated and JV companies declined 1.7% to S$40.0m, representing a contribution of 52.7% of the group's pre-tax profits. PATMI rose 5.5% YoY to S$67.0m.
Stable 4QFY13 likely
Management guides that the group's core business is expected to remain stable for the last quarter of FY13. The aviation industry will continue to be impacted by uncertainties in the major economies of the world. The group will maintain its focus on cost controls and productivity improvements.
Maintain HOLD
Still using a P/E peg of 17.1x and our basic EPS forecast of 25.6 S cents for 4QFY13F-3QFY14F, we reduce our fair value estimate from S$4.48 to S$4.38 and maintain our HOLD rating on SIAEC.
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