SIA Engineering's net profit predicted to dip 4% to $173.5m this year

Their initial gains may be overshadowed by difficulties in the year.

Based on reports by DBS, SIAs stock has initially managed to rise almost 18% YTD in 2017, largely on the premise of special dividends, though the somewhat underwhelming 5-Singapore cents special dividend shows caution from management amidst structural challenges in the industry, and may be indicative of difficulties to come for the full year.

“4Q-FY17 PATMI came in at $45.9m – up 11% y-o-y but down 13% q-o-q – slightly above our expectations owing to a better showing from the associates line, as engine JV Eagle Services Asia secured higher workload on PW4000 engines. For the full year, we estimate FY17 core net profit to be $173.5m, down 4% y-o-y. Headline net profit was boosted by a gain on divestment of SIA’s 10% stake in HAESL of c.S$178m,” DBS said.

Here’s more from DBS:

Forecasts for SIA’s FY18/FY19 have been adjusted upward by around 5-6% to account for better-than-expected associate/JV profits and stronger top-line growth at the line maintenance segment. It is expected that there will be a full-year dividend of 13 Scts in FY17/18, in line with SIE’s payout policy of 85-90% of core earnings.