The outlook is challenging. Core Company operations remain challenged by longer maintenance intervals and lighter work content, but there appears to be a pipeline for engine shop visits at the associates/JV level which will contribute positively. We see a trend of increasing proportion of bottom line contribution coming from associates/JV.
Downgrade to Neutral; new target price of S$2.81 (previously $3.56)
We have cut our estimates for the core Company. Consequently, FY19e/FY20e PATMI are -16%/-14% lower than previous. SIAEC is in a net cash position and offers a dividend yield of 4.1%. Our target price gives an implied FY19e forward P/E multiple of 20.6 times.