Brokers' take

SIA Engineering Co | HOLD Target price: S$3.84 July 26 close: S$3.71 DBS Group Research, July 26

Q1 FY18 net profits came in below expectations, which has proven to be a dampener on the stock, but developments announced during the quarter on the engine shop front (new engine joint venture with GE Aviation; servicing of the PW1100G-JM engines) are positive in terms of longer-term positioning, in our view.

In the near term, we see a lack of earnings drivers for SIA Engineering Co (SIE), with line maintenance the only growth area . . . While we see limited upside with SIE trading at about 26 times FY18 price-earnings ratio despite earnings decline, we do not rule out potential merger and acquisition interests on the stock.