Between Nov 6 and 7, SIA Engineering Company : S59 -0.41% (SIAEC) bought back 290,100 shares at an average price of S$2.46 per share.

 

This took the number of shares acquired on the current mandate to 3.14 million shares, or 0.29 per cent of the issued shares (excluding treasury shares) as at the beginning of the mandate in July. This has already surpassed the 0.22 per cent of issued shares (excluding treasury shares) bought back in its FY2024 (ended Mar 31).

 

On Nov 5, SIAEC reported that its H1 FY2025 (ended Sep 30) group revenue increased 12.1 per cent from a year earlier to S$576.2 million.

 

This was attributed to demand for maintenance, repair, and overhaul services (MRO) remaining strong, with all operating segments recording higher revenue. The group noted that MRO demand remains strong due to healthy air travel and delays in new aircraft deliveries. Airlines are keeping older planes in operation, increasing the need for MRO support.

 

The group&rsquo s H1 FY2025 expenditure rose by 11.5 per cent to S$572.8 million, primarily due to higher material, manpower and repair costs, as well as an exchange loss compared to a gain in the previous period. Consequently, the group&rsquo s H1 FY2025 operating performance improved by S$3.3 million from the year-ago period, resulting in an operating profit of S$3.4 million.

 

The share of profits from associated and joint venture companies increased by 17.2 per cent to S$58.6 million, with S$56.2 million from the engine and component segment, and S$2.4 million from the airframe and line maintenance segment. This brought the group&rsquo s H1 FY2025 net profit to S$68.8 million, a 16 per cent improvement from the same period last year.

 

For the 2024 year to Nov 7, SIAEC has generated a 3.4 per cent price gain, with dividends extending the total return to 6.1 per cent. With its H1 FY2025 results, it declared an interim dividend of two Singapore cents per share that will go ex-dividend on Nov 12.

 

The stock has also booked S$12 million of net institutional inflow in the 2024 year to Nov 7, ranking it within the 25 stocks with the highest net institutional inflow for the period, bucking the net institutional outflow booked by the both the industrials sector and broader Singapore stock market.

 

SIAEC noted that MRO demand continues to be driven by healthy air travel demand. Nevertheless, the group acknowledged industry challenges such as supply chain constraints, rising costs, tight manpower and geopolitical tension, and said that it is dealing with these issues, especially supply chain problems and high costs.

 

The group noted that to seize opportunities and tackle challenges, it will focus on strengthening core competencies and expanding its MRO capabilities, capacity and geographical presence. More specifically, it will do so through investments and collaborations to enhance its MRO ecosystem.

 

SIAEC added that it will also maintain strict cost discipline, and is increasing efforts to integrate lean principles and digitalisation through an enterprise operating system framework. The group said that it is committed to building a steady pipeline of skilled talent through partnerships with institutes of higher learning.

 

In March 2023, SIAEC announced that it signed a memorandum of understanding with seven institutes of higher learning to create diverse pipelines of skilled professionals, offer lifelong learning opportunities for the workforce, and foster knowledge exchange between industry and academia.

Seven primary-listed companies conduct buybacks over the five trading sessions from Nov 1 to 7, with a total consideration of S$3.4 million

 

Over the five trading sessions from Nov 1 to 7, institutions were net sellers of Singapore stocks, resulting in a net institutional outflow of S$141 million. This was a slower pace than the S$404 million net outflow over the preceding five sessions.

 

Stocks that led the net institutional outflow over those five sessions were OCBC : O39 +1.13%, Capitaland Ascendas Reit : A17U +0.38%, CapitaLand Integrated Commercial Trust : C38U +0.51%, Mapletree Pan Asia Commercial Trust : N2IU -0.8%, Mapletree Industrial Trust : ME8U +0.44%, UOB : U11 +7.18%, Frasers Centrepoint Trust : J69U 0%, Suntec Reit : T82U -2.61%, Frasers Logistics & Commercial Trust : BUOU -1.96% and Keppel : BN4 -0.47%.

 

Meanwhile, DBS : D05 +1.68%, Hongkong Land Holdings : H78 -2.53%, Singtel : Z74 +1.56%, Jardine Matheson Holdings : J36 -1.33%, Singapore Technologies Engineering : S63 -0.85% (ST Engineering), Sheng Siong Group : OV8 +0.61%, Yangzijiang Shipbuilding Holdings : BS6 +3.88%, Jardine Cycle & Carriage : C07 -1.53%, Yanlord Land Group : Z25 -0.67% and Capitaland Investment : 9CI -0.36% led the net institutional inflow over the five sessions.

 

DBS booked S$109 million in net institutional inflow on Nov 7 following the release of its Q3 FY2024 (ended Sep 30) results in which it posted a 15 per cent increase in net profit from the year-ago period to S$3 billion. The group also announced a significant buyback programme.

 

It was also announced last week that Yangzijiang Shipbuilding will join the MSCI Singapore Index from the close of Nov 25, advancing to the mid-cap size segment per MSCI&rsquo s GIMI (global investable market indexes) methodology.

 

With the shipbuilder&rsquo s market capitalisation now at S$10 billion, this achievement is notable given the rising cut-off market cap thresholds for developed markets across all four MSCI reviews this year. Notably, in the November 2024 rebalance, Singapore stands out as the only Asia developed market with a net increase in MSCI Standard Index constituents.

 

From a sector perspective, real estate investment trusts (Reits) and financial services booked the most net institutional outflow in the five sessions, while the real estate (excluding Reits) and industrials sectors bucked the trend and booked the most net institutional inflow.

 

Seven primary-listed companies conducted buybacks with a total consideration of S$3.4 million in the five sessions.

 

ST Engineering led the consideration tally after buying back 512,900 shares at an average price of S$4.51 per share on Nov 1. This took the number of shares acquired on the current mandate to four million shares, or 0.2 per cent of the issued shares (excluding treasury shares) as at the beginning of its mandate in April.

 

Digital Core Reit Management acquired 303,300 units of Digital Core Reit : DCRU -1.69% on Nov 7. This brings the total units repurchased to 1.25 per cent of its issued units since the beginning of the current mandate.

 

During the five trading sessions, 70 director interests and substantial shareholdings were filed for more than 30 primary-listed stocks. Directors or CEOs filed three acquisitions and no disposals, while substantial shareholders filed seven acquisitions and seven disposals.

It is riding on robust demand for MRO services amid supply chain constraints and deferred plane deliveries

 

AVIATION maintenance, repair and overhaul (MRO) services provider SIA Engineering : S59 -1.61% (SIAEC) will lean more on its operating business in the next two to three years as it scales up processes, said chief executive officer Chin Yau Seng.

 

At its financial results briefing on Wednesday (Nov 6), the helmsman noted that contributions from its associated and joint venture (JV) companies have bulked up the bottom line of Singapore Airlines : C6L +0.31%&rsquo (SIA) MRO subsidiary recently.

 

&ldquo In the coming period, we have to lean more on the operating side of business, the core business,&rdquo added Chin, without giving any forward guidance on this aspect.

 

SIAEC&rsquo s operating profit for the second quarter of FY2025 to September was S$2.4 million, a reversal from a loss of S$300,000 in the year-ago period.

 

By contrast, its associated and JV companies contributed S$30.6 million, up 8.9 per cent or S$2.5 million year on year.

 

This accounted for the lion&rsquo s share of SIAEC&rsquo s net profit of S$35.6 million, which was 10.2 per cent higher year on year.

 

Earnings per share stood at S$0.0317 versus S$0.0287 for the year-ago period. The group declared an interim dividend per share of S$0.02, unchanged from a year ago.

 

Revenue was S$307.5 million, up 22 per cent from S$252.1 million. Net asset value per share was S$1.47 as at end-September, marginally lower than the S$1.503 six-months prior to that.

 

Cabin refurbishment

Chief financial officer Ng Lay Pheng added: &ldquo Everything that we are doing is... building a lot of foundation. Going forward, we definitely need to lean more in terms of the operating performance.

 

&ldquo Quite a fair bit of things have been done, and we are definitely working towards delivering something a lot more meaningful. At the moment, it is not showing but I assure you that a lot of effort has gone into building that and getting us ready.&rdquo

 

When asked whether operating profit would stay at the current level, Ng replied that it was very difficult to say especially when the recent numbers were very small.

 

Meanwhile, SIAEC is riding on the robust demand for MRO services arising from increasing air travel capacity and ageing fleets amid protracted delivery delays by planemakers Boeing and Airbus.

 

Said Chin: &ldquo The demand for MRO services continues to be very, very strong... So it&rsquo s not a bad place to be as a supplier.&rdquo He added: &ldquo In a way, we can almost say... we can pick the business because it is kind of a sellers&rsquo market.&rdquo

 

Also, SIAEC will be undertaking the upcoming S$1.1 billion cabin refurbishment that SIA recently announced. This involves retrofitting 41 Airbus A350-900 long-haul and ultra-long-range aircraft with newer cabin products.

 

While capacity has been tight, SIAEC will be able to handle SIA&rsquo s cabin upgrade. Chin pointed out that its Subang base in Malaysia would be operational in 2025, adding to the company&rsquo s network capacity.

 

But Chin would not disclose the margin from the multi-year programme. Neither was there information about whether the revenue would be recognised in equal percentages from 2026 or to be ramped up in later years.

 

DBS analyst Jason Sum wrote in a note published on Wednesday that SIAEC&rsquo s Q2 net profit has missed street expectations, including his research house&rsquo s. He added that profitability was impacted by margin erosion at SIA Engineer&rsquo s core business &ndash base and line maintenance.

 

He also expects SIA&rsquo s cabin upgrade to contribute approximately S$40 million to S$60 million in incremental annual revenue for SIAEC from FY2027 to FY2031, potentially boosting FY2027 net profit by about 2 to 3 per cent &ndash assuming a mid-to-high single-digit margin profile.

 

OCBC analyst Ada Lim said in a report released after the financial results briefing that SIAEC is well-poised to capture robust MRO demand, given its investments in capacity expansion and capability development, the increasing strength of its portfolio of partnerships, and exposure to the up-and-coming Indian market.

 

But she also noted that it may take some time for the company&rsquo s efforts to bear fruit.

Increase in revenue comes amid healthy demand for maintenance, repair and overhaul services

AIRCRAFT maintenance provider SIA Engineering : S59 +1.63% (SIAEC) on Tuesday (Nov 5) reported a net profit of S$35.6 million for the quarter ended Sep 30, up 10.2 per cent from S$32.3 million in the corresponding year-ago period.

 

This translates to earnings per share of S$0.0317, from S$0.0287 year on year.

 

Revenue for the quarter was S$307.5 million, up 22 per cent from S$252.1 million.

 

The group declared an interim dividend per share of S$0.02, unchanged from a year ago. It will be paid out on Nov 29.

 

For the quarter, the group&rsquo s operating profit was S$2.4 million, reversing from an operating loss of about S$300,000 in Q2 FY2024. The share of profits from associated and joint venture companies came in at S$30.6 million, gaining 8.9 per cent from S$28.1 million.

 

On a half-year basis, net profit was S$68.8 million, 15.9 per cent higher than S$59.3 million in the corresponding year-ago period. Revenue for the first half was S$576.2 million, up 12.1 per cent from S$514 million yoy.

 

This translated to earnings per share of S$0.0613 in H1, up from S$0.0528 yoy.

 

Commenting on its half-year performance, the group noted that demand for maintenance, repair and overhaul (MRO) services remained healthy in this period, with all operating segments reporting higher revenue.

 

In addition, group expenditure for the six months increased at a lower rate of 11.5 per cent to S$572.8 million, mainly due to higher material costs, manpower costs and repair costs and an exchange loss, a turnaround from the exchange gain recorded in the comparative period the year before.

 

The group thus posted an operating profit of S$3.4 million for the first half, up by S$3.3 million from a year ago. Share of profits from associated and joint venture companies increased by 17.2 per cent on-year to S$58.6 million in H1 FY2025.

 

The group noted that line maintenance demand across its network continued to increase on-year. It handled 9 per cent more flights in Singapore in this half, compared to the same period a year ago.

 

However, fewer aircraft checks were completed in its Singapore hangars in the six months, due to a higher mix of legacy aircraft checks with heavier work content, as well as cabin refurbishments.

 

&ldquo The duration of some aircraft checks was also extended because of supply-chain constraints that led to longer lead times to obtain relevant aircraft spares,&rdquo said SIAEC.

 

Meanwhile, the first of two hangars in Subang, Malaysia, is scheduled to begin operations in the second half of 2025.

 

&ldquo The increase in hangar capacity is timely, as SIAEC has been appointed to perform the cabin retrofit of Singapore Airlines&rsquo A350 long-haul fleet starting from 2026,&rdquo said the aircraft maintenance group.

 

While the company is contending with challenges including supply-chain issues and elevated cost, MRO demand continues to be driven by an increase in air travel, said SIAEC.

 

&ldquo In addition, the delays in the delivery of new aircraft have also resulted in airlines keeping older aircraft in operation and needing MRO support for those aircraft,&rdquo it said.

 

The group has taken measures to mitigate ongoing supply-chain challenges, and its network of engine and component shops was able to meet the increase in demand and generated more output on-year, said SIAEC.

 

It expanded engine shops in Singapore, and in June 2024, established a joint venture with American-Irish power manufacturer Eaton to provide MRO services for Eaton-manufactured aircraft components in the venture&rsquo s new Malaysian facility.

 

The facility is expected to be fully operational by early 2026.

 

The group anticipates that it will incur associated start-up and development costs over the next two to three years due to investments for business expansion.

&lsquo Watch this space,&rsquo says SIA Engineering CEO Chin Yau Seng, about potential opportunities of working with Air India

 

SIA Engineering : S59 0% is looking at tapping opportunities that arise from the transformation of Air India, which placed orders for 470 aircraft in 2023.

 

At the financial results briefing of SIA Engineering on Monday (May 13), Air India was mentioned several times as it appeared that the carrier owned by Indian conglomerate Tata Group could feature increasingly on the radar of the MRO (maintenance, repair and overhaul) subsidiary of Singapore Airlines (SIA) : C6L +0.74%.

 

Already, on Saturday, SIA Engineering was appointed to be Air India&rsquo s strategic partner to develop base maintenance facilities in Bangalore, India. SIA Engineering is the exclusive partner to help Air India with designing and conceptualising the outfit.

 

Projected to be ready in 2026, the Bangalore facilities will comprise both wide-body and narrow-body hangars, including associated repair shops, to support Air India&rsquo s fleet.

 

This comes after the Singapore MRO player bagged a deal in February to provide extensive component support coverage for Air India group&rsquo s current fleet of Airbus A320 aircraft for 12 years. 

 

That contract was valued at US$180 million, SIA Engineering chief financial officer Ng Lay Pheng disclosed at the Monday briefing. She declined to reveal the profit margin.

 

SIA Engineering and Air India would share the same parentage if the merger of Air India and Vistara (the airline joint venture between SIA and Tata) secures regulatory approval.

 

SIA will own 25.1 per cent of the merged entity if the corporate action proceeds without hitches. 

 

The chief executive officer of Air India, Campbell Wilson, is also no stranger to SIA Engineering executives. He was a long-time SIA executive and last helmed SIA&rsquo s budget carrier Scoot before taking over the reins at the Indian carrier. 

 

While SIA Engineering said that it was too early to talk about investing in Air India&rsquo s Bangalore base maintenance facilities, its senior vice-president for partnership management and business development Wong Yue Jeen noted that there will be opportunities for MRO investments in component shops and engine shops to support the set-up.

 

&ldquo Watch this space. Let&rsquo s see how things develop,&rdquo SIA Engineering CEO Chin Yau Seng added.

 

SIA Engineering is not barred from providing MRO services to existing customer and Air India&rsquo s budget competitor IndiGo, which also placed orders for 500 Airbus A320 aircraft last year, and has an MRO facility near Air India&rsquo s Bangalore site. 

 

Meanwhile, SIA Engineering might be doing fewer heavy checks at its bases in Singapore and at Clark Air Base (in the Philippines) &ndash 114 in FY2024 to March, and 126 in FY2023.

 

Chin pointed out that the absolute numbers do not tell the full story. This is because more Airbus A380s have been undergoing heavy checks, and these jumbo planes take up a lot more hangar time as these older aircraft and the B777s are kept flying amid production challenges faced by the plane-makers. 

 

SIA Engineering delivered an 11.5 per cent rise in earnings year on year to S$37.8 million for the second half of FY2024 to March, driven by robust aviation maintenance, repair and overhaul demand. Revenue was up 33.7 per cent to S$580.2 million for the period, the MRO group announced last Friday.

SIA Engineering' s earnings for FY2024 increased by 46.2% y-o-y to $97.1 million, on the back of a 37.5% jump in revenue to $1.09 billion.

 

The improvement can be attributed to the recovery in demand for its services with aviation picking up following the pandemic.

 

For the most recent second half ended March, earnings increased by 11.5% y-o-y to $37.8 million, and revenue rose 33.7% to $580.2 million.

 

SIA Engineering plans to pay a final dividend of 6 cents, bringing the full-year payout to 8 cents. For the preceding FY, a total of 5.5 cents was paid.

 

SIA Engineering sees healthy demand for its services with global air travel edging closer to pre-pandemic levels.

 

" However, a tight labour market, supply chain issues and inflation remain key concerns that weigh on our near-term operating margins," the company warns.