SIA Engineering FY23 net profit forecast trimmed by $10m

The revised forecast was made to reflect the company's "slightly faster manpower ramp-up."

UOB Kay Hian has trimmed its financial year 2023 (FY23) net profit forecast for SIA Engineering by $10m to reflect the company's plan to ramp up its manpower recruitment in preparation for further flight recovery.

With the cut, the analyst's forecast now stands at $92m which is still 35% of $24m higher than SIAEC's reported financial year 2022 (FY22) net profit of $68m. With a higher expected net profit, UOB Kay Hian also expects SIAEC to resume its dividend payment in FY23.

UOB Kay Hian explained that whilst SIAEC's manpower ramp-up might create some short-term mismatch between revenue recovery and cost build-up, it would not change our base case of an overall strong recovery in FY23."

In a report, the analyst said SIAC will see an "even faster pace of recovery" from the start of FY23 due to " the positive impact from Singapore’s border measure relaxations."

Amongst the positive impacts, SIAEC has seen from the relaxation was its improved line maintenance business volume which increased to 45% of its pre-pandemic level in April.

UOB Kay Hian said it also expects SIAC's core earnings to turn positive in the first quarter of FY23 given that its previous record in the second quarter of FY22 was only a "tad negative."