SIA Engineering Company

[AQ.]

decent point from CIMB report:

Pratt & Whitney fading

Associates contribution slumped 53% qoq in 2Q16 to S$6.8m due to provision for pension top-up and provision for doubtful debts. We expect Eagles Services, servicing Pratt & Whitney engines to remain weak as P4000 that power B747s are replaced by B777-300ERs (GE90) and B787 Dreamliner (Rolls Royce’s Trent 1000 and GEnX).

Rolls Royce is still relevant

JV contribution was up 25% qoq to S$11.9m in 2Q16 due to timing of engine shop visits. SAESL, which services Rolls Royce engines will continue to be relevant especially the Trent 1000 and Trent XWB (A350) engines. Trent 1000 entered the market in 2011 and Trent XWB in 2013. With the engine cycle lasting up to six years (vs. four to five years previously), management expects the next engine cycle to return in 2018/19.