Report Summary

• SIA Engineering (SIE) posted a 21% year-on-year increase in 1HFY26 core net profit to S\$83.4m, driven by higher contract rates with Singapore Airlines and easing supply chain constraints, enabling higher output of engine and component repairs.
• The company is investing in capacity expansion and new business initiatives, including operations in Cambodia and Malaysia, the use of new enterprise systems and AI, and expansion of quick-turn engine services, positioning it for long-term growth in the global MRO market despite some short-term gestation costs.
• CGS International upgraded SIE from Reduce to Add and raised its target price to S\$4.00, citing improved outlook and strong earnings prospects, but cautioned on potential risks from project execution delays and cost overruns.
• SIE’s financials show robust revenue and profit growth, a rising dividend yield, and strong balance sheet, with Singapore Airlines holding a 77.6% stake; ESG scores have improved, particularly in environmental initiatives and workplace safety.
• Compared to sector peers, SIE exhibits solid ROE and growth, and maintains high market share in line maintenance at Changi Airport.