Company Overview

▪ SIA Engineering Company (SIAEC) is a leading provider of Maintenance, Repair, and Overhaul (MRO) services in the AsiaPacific region.

▪ They offer a comprehensive range of MRO services, including airframe, line, cabin, fleet management, component, and engine services.

▪ The company maintains a Strategic Partnership Portfolio with 24 subsidiaries and joint ventures across 8 countries.

Headquarters and Facilities:

SIAEC is headquartered in Singapore, where they operate six hangars with three more in the Philippines. SIAEC's maintenance facilities are equipped to handle both widebody and narrowbody aircraft, providing complete MRO solutions to a large client base of international airlines and aerospace companies. Line maintenance services are provided at 34 airports across 8 countries, ensuring aircraft are ready for flight operations. As of March 2024, SIA Engineering Company (SIAEC) had around 6,000 employees

1HFY25 Financial Performance

▪ Revenue: SIAEC reported operating revenue of $576.2 million for the first half ended Sept, an increase of 12.1% from 1HFY24, while expenditure increased at a lower rate of 11.5% to $572.8 million.

▪ Strategic Partnership Portfolio: The income from the Strategic Partnership Portfolio in 1HFY25 was S$58.6 million, derived from the share of profits of associated companies and joint ventures.

▪ Net Profit: The net attributable profit was S$68.8 million, an improvement of 16% from 1HFY24, with a net profit margin of 11.9%.

Supply Chain Management:

▪ Forecasting and Provisioning: SIAEC forecasts and provisions parts and materials in advance to meet the maintenance needs of aircraft, engines, and components. This proactive approach helps in maintaining adequate inventory levels.

▪ Inventory Management: Inventory levels are monitored and replenished regularly to ensure that there is no shortage of essential parts and materials. This helps in maintaining smooth operations and avoiding any delays in maintenance activities.

▪ Supplier Relationships: SIAEC maintains close communication with original equipment manufacturers (OEMs) and major part suppliers. This collaboration helps in anticipating potential supply disruptions and ensuring continuous access to necessary parts and materials.

▪ Consignment Programs: SIAEC has programs with several major part suppliers to consign their parts on-site. This arrangement ensures that parts are readily available when needed, reducing lead times and improving efficiency.

▪ Supplier Network Expansion: SIAEC continues to expand and diversify its supplier network. This includes identifying alternate vendors as backups to mitigate risks associated with supply chain disruptions.

▪ Supplier Evaluation and Monitoring: The company conducts robust evaluations of suppliers during the selection process. Additionally, processes are in place to manage and monitor supplier performance, including adherence to SIAEC's Supplier Code of Conduct. Ongoing monitoring through audits and supplier engagements ensures compliance with established standards.

▪ Sustainability Practices: SIAEC is committed to sustainable supply chain management. The company engages with key suppliers to understand their sustainability practices and targets, contributing to SIAEC's net-zero emissions goal.

Market Position and Achievements:

▪ One-Stop Maintenance Facility: SIAEC operates a one-stop maintenance facility in Singapore, providing world-class MRO services to over 80 international carriers and aerospace equipment manufacturers. This facility is equipped to handle a wide range of maintenance needs, from routine checks to major overhaul.

▪ Certifications and Approvals: The company holds certifications from 29 national airworthiness authorities worldwide, which underscores their commitment to maintaining high standards of safety and quality in their operation

▪ Expansion and Growth: SIAEC has been expanding its scope of services and geographical presence. They have secured new contracts and extended existing ones, such as the component support programme with Air India and the A321neo maintenance agreement with Hawaiian Airlines.

▪ Innovation and Collaboration: SIAEC is exploring further partnerships and collaborations to enhance their capabilities and service offerings. They have signed agreements with companies like Eaton, Embraer, and Thales to explore business development opportunities in the Asia-Pacific region.

▪ Recent Achievements: SIAEC was awarded the "Aftermarket Service Provider of the Year" and received "Marketing Campaign of the Year" at the MRO Asia Pacific Awards 2024. The company was also recognized with the "Gold Standard for Excellence in Talent Management & Acquisition“ and “Gold Standard for Excellence in Learning & Development, Coaching & Mentoring" at the Singapore HR Awards 2024.

Strategic Positioning and Future Outlook:

▪ Expanding Capabilities & Geographical Presence: SIAEC is collaborating with OEMs and industry partners to increase their presence in new markets and expand capabilities both in-house and across their joint venture network

▪ Strengthening Core Operations: The company is maintaining cost discipline while navigating elevated costs and accelerating productivity gains through data, digital, technology, lean, and continuous improvement.

▪ Flight Recovery: There has been a 9% increase in flights handled compared to 1H FY23/24, with flight recovery at 95% of preCOVID levels as of September 2024.

▪ Industry Challenges: The company is facing supply chain constraints, a tight labor market, elevated costs, and escalating geopolitical tensions.

▪ Growth Avenues: SIAEC is focusing on building capabilities, increasing presence abroad, and expanding capacity.

▪ Business Expansion Initiatives: The company is positioning for long-term growth, though associated start-up and development costs are expected to temper financial performance over the next two to three years.

Risks

According to DBS in Nov, risks include the potential for slower-thanexpected recovery in flight volumes, which could impact revenue growth, and the ongoing challenges of managing elevated costs and supply chain constraints. Additionally, the tight labor market and escalating geopolitical tensions pose significant risks to the company's operational efficiency and strategic initiatives.