Line maintenance expansion could buoy SIAEC from MRO competition: report

The firm is reducing the business’ man hours and improving turnaround time.

SIA Engineering’s (SIAEC) expansion of its line maintenance operation could push back against intensifying competition from regional maintenance and repair and overhaul (MRO) centres, according to UOB Kay Hian.

With line maintenance noted to be a typically high-margin business, its expansion is expected to bring its earnings to recover in the near future.

UOBKH added that the company’s reduction of manhours and improvement of turnaround time has improved efficiency.

The company’s use of remote-controlled aircraft tugs is also expected to produce the most operating leverage. SIAEC also cited its use of drones, pneumatic tube system for parts delivery, robotic process automation and additive manufacturing.

SIAEC’s earnings fell 14.4% YoY in the first half of FY 2020, mainly attributed to start-up costs at Eagle Services Asia (ESA).

According to an announcement, the company’s revenue climbed 0.7% to $512.7m in H1 FY 2020, mainly attributed to higher airframe and line maintenance revenue.
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Its net profit grew 11.6% YoY to $87.6m in H1 FY 2019-2020, driven by a 74% YoY rise in operating profit from reducing costs in accommodation, subcontracting and other operating expenses.

UOBKH projects SIAEC’s net profit to rise 12.5% in FY 2020 and 9.8% in FY 2021.

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