BNP Paribas downgrades SIA Engineering (S59.SG) to Hold from Buy, cuts target price to $4.69 from $5.00; says move “a simple valuation call” following “excellent” 1HFY11 results, 50% share price outperformance vs STI over past 12 months. 

“We believe the earnings growth momentum has peaked for the stock”; notes 1HFY11 operating profit +48.9% on year, but 2Q11 operating profit down 2% on year, due to higher costs; says extent of further cost reduction limited. Adds at current valuation of 18.3X our FY11E P/E, estimated 6.2% net profit CAGR for next 2 years, stock near fair value. 

Adds global MRO recovery on track, but slightly concerned about flat growth for line-maintenance revenue (most profitable part of SIAEC's business), lower revenue per flight in 2QFY11, also exchange rate remains a concern as 2nd leg of growth likely to be driven by associates, JVs. Stock +0.9% at $4.47.