SG: SIA Engineering - Downgrade to HOLD

Stock Name: SIA Engg
Company Name: SIA ENGINEERING CO LTD

Research House: OCBC

Price Call: HOLD

Target Price: 4.04

SIA ENGINEERING 9 May 2012

DOWNGRADE TO HOLD - Record quarterly revenue, lower margins - Final dividend of S$0.15/share - New FV of S$4.04; downgrade to HOLD SIA Engineering Co Ltd (SIAEC) released its 4QFY12 report card which was largely in line with our expectations. In FY12, revenue from SIAEC's Fleet Management segment jumped 33% to S$218m while its share of profits of JV and associated companies grew 9% to S$157m. Management also proposed a final dividend of S$0.15/share. With most of its revenue denominated in USD, SIAEC's profit margins will likely face further downward pressure if the USD weakens. We increase our fair value estimate of SIAEC to S$4.04/share but downgrade it to HOLD, after a 17% gain in its share price over the last three months.