Are SIA Engineering shares worth buying now?

• SIA Engineering Co Ltd (SGX: S59) share price rose 1.3% last week
• The aircraft engineering stock has rallied steadily in the last two weeks
• UOB’s equity research team recently named SIA Engineering as its top aviation pick
• Keen to trade SIA Engineering shares? Open an account with us to start today

SIA Engineering stock price: what’s the latest?

SIA Engineering shares have been rising slowly since UOB’s equity research team named the stock as its top pick for the aviation sector.

The listing is up by approximately 3% in the last two weeks, despite concerns over rising fuel prices.

In terms of stock outlook, the aircraft engineering company has an average rating of ‘outperform’, alongside an average share price target of S$2.82 (based on the most updated SGX StockFacts data).

The price target works out to a 14% upside potential from the aircraft engineering company’s last traded stock price of S$2.42 on Monday (04 July 2022).

How do analysts view the stock?

UOB analyst Roy Chen reiterated a ‘buy’ call on SIA Engineering while lowering price target slightly to S$2.70 (from S$2.90) on 21 June 2022.

Chen said that SIA Engineering is UOB’s top aviation stock to invest in because it provides good visibility regarding its business volume recovery, has a strong balance sheet (it has a net cash position of S$623 million at end-March 2022, which is equivalent to 23.2% of its market cap), and a valuation that is ‘already cheap’.

‘Current price of S$2.37 implies an FY25F (normalised year) price-to-earnings (PE) ratio of 14.2 times (10.9 times if excluding net cash), 2.4 standard deviation (SD) below its average of 23.2 times during the pre-pandemic years of FY14-19,’ he noted.

Meanwhile, OCBC also called the stock a ‘buy’ in its latest investor note, but raised target price on SIA Engineering to S$2.90 from S$2.68 previously.

‘As airlines ramp up capacity in line with the recovery of air travel demand, we could see further recovery ahead in FY2023, baring the resurgence of Covid-19 cases,’ the analysts wrote.

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