SINGAPORE (Nov 5): OCBC is maintaining its “hold” call on SIA Engineering Company (SIAEC) with $3.85 fair value as its 1H results have missed its expectations while persistent structural headwinds continue to buffet the industry.

In 2Q16, SIAEC reported revenue declined 6.7% to $266 million from a year ago on lower contributions from airframe and component overhaul services (ACS) as well as its fleet management programme (FMP) segments but offset by higher contribution from line maintenance (LM) segment. 2Q share of profits from associated and JV companies decreased 35.7% to $18.7 million. However, as 2Q operating expenses fell 11.3% to $239.0 million on lower subcontract, staff and material costs, PATMI came in 5.7% higher at $44.5 million.

“1HFY16 missed our expectations as PATMI declined 10.3% y-o-y to $85.8 million, which formed only 44.5% of our FY16 forecasts,” says lead analyst Eugene Chua in a Wednesday report.

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