In her Feb 20 report, Lim likes SIAEC for several reasons including its “constructive” outlook for its maintenance, repair and overhaul (MRO) business.
Citing data from the International Air Transport Association (IATA) that aircraft and engine order backlogs have reached almost 60% of active fleets as at December 2025 and Airbus guidance of lower-than-expected commercial plane deliveries in 2026, Lim also notes that limited aircraft and engine availability is hindering “significant” growth for aviation.
However, with the aircraft MRO segment in an “upcycle”, Lim is confident in SIAEC’s strategy to expand capacity. She notes that the company has secured the necessary regulatory approvals for the first of two hangars at Base Maintenance Malaysia (BMM), with the second hangar expected to come online in 2HFY2027. In addition, she points out that the company is also commencing line maintenance operations in Manila after the quarter.
Lim, who also has a higher fair value estimate of $4.05 from $3.68 previously, has lowered her cost of equity (COE) assumption to 7.1% from 7.6% on the lower risk-free rate and beta inputs. Lim has also increased her terminal growth rate assumption to 2.25%, 25 basis points (bps) higher.
See also: Mixed sentiments on Genting Singapore
CGSI sees SIAEC as ‘high conviction’ counter
CGS International’s (CGSI) Raymond Yap is also bullish on SIAEC with an unchanged “add” call.
To Yap, SIAEC is “on track” for a “good” FY2026 although there may be several short-term pressures which contributed to a “flattish” q-o-q net profit. These include the 23.9% q-o-q drop in earnings before interest and tax (ebit) attributed to “gestation losses" on the new hangar at BMM and also the start of line maintenance operations at the new Techo International Airport in Cambodia in September 2025. That said, the company’s results for the 3QFY2026 and 9MFY2026 still stood broadly in line with his estimates.
See also: Maybank upgrades SIA to 'hold'; DBS, UOB Kay Hian maintain respective calls but raise target price
On the 17% y-o-y rise in 9MFY2026 core net profit, Yap attributes this to two reasons — the upward revision in contract rates charged to the SIA group from April 1, 2025; and the easing of supply chain constraints that allowed SIA Engineering to raise its output of engines and component repairs.
Yap also highlights several growth drivers for SIA Engineering. These include business expansion in Asia — the BMM hangars, potential operation of base maintenance facilities in India on behalf of Air India, and MRO capacity and capability enhancement for next-generation aircraft.
In particular for the company’s capability/capacity upgrading, Yap singles out the company’s letter of intent (LOI) with Safran Aircraft Engines in November 2025 to broaden SIAEC’s “partnership in CFM LEAP engine maintenance services” and the “potential formation of a JV (joint venture) in LEAP engine MRO in Singapore”. He alludes to the company's engine services division at Changi becoming more efficient at turning around LEAP engines and how one of its outfits in Malaysia is able to repair a high-value component called the Air Data Inertial Reference Unit (ADIRU).
Downside risks for CGSI include project execution delays and larger-than-expected gestation losses for expansion projects. Yap expects gestation losses to see a peak between October 2026 and March 2027 when BMM’s second hangar is operationally ready. He also expects that expansion of Singapore Aero Engine Services Private Limited (SAESL) to impact SIAEC’s financials from FY2026 to part of FY2028.
Yap’s unchanged target price of $4 is based on a target P/E of 25 times which is one standard deviation above the mean since 2006.
At around 3.25 pm on Feb 20, the counter is trading at $3.5 per share, a decline of seven cents or 2% from the previous trading day.
