SINGAPORE (Jan 7): UOB KayHian is upgrading SIA Engineering (SIAEC) to “buy” with a target price of $2.70, saying the stock should outperform this year after seeing an excessive 28% slump last year.
SIAEC was a key underperformer in 2018 amid concerns over a deteriorating top-line. While challenges remain, UOB says SIAEC is addressing this by growing its line maintenance business.
SIAEC is banking on growing this business in Japan and the US, where it hopes to add scale by providing higher value-added services such as component manufacturing and installation as well as engine checks. While SIAEC does not expect any material contribution for at least another two years, UOB is encouraged by the fact that SIAEC is taking steps to grow this business.
