Broker: OCBC Investment Research

Call: Hold

Target Price: $3.45

Since 2014, the share price of SIA Engineering has fallen approximately 16 per cent.

The weakness was mainly due to poor performances from its core business as well as lower contributions from associated companies and joint ventures.

With a set of lacklustre operating statistics of Changi Airport between January and July this year, weaker revenue is expected from its line maintenance segment in the near term. The company's heavy maintenance business has been negatively impacted as newer aircraft and engines are designed with increasing reliability and better cost efficiency.

But over the longer term, growth will be driven by its line maintenance segment as capacity is set to double at Changi Airport with the addition of Terminals 4 and 5. Fleet increase by 2016 will help smoothen earnings despite longer maintenance cycles, and joint ventures with Boeing to perform maintenance, repair and overhaul works in the region should help drive earnings ahead.


Broker: CIMB

Call: Buy

Target Price: $0.93

Innovalues, a key manufacturer of sensors and engine parts, is poised to ride two secular growth trends - the advent of "smart" cars, which usually use more sensors, and stronger awareness of environmental protection and efficiency.

Higher order volumes and improved margins will drive earnings per share from the 2015 financial year to 2017 by 43 per cent, 20 per cent and 11 per cent respectively.

Initiatives aimed at reducing labour costs and office automation machinery will see gross margins improve to 30.5 per cent in the 2017 financial year from 26.6 per cent in 2014.

More business will generate more cash with little debt and capital expenditure, and the projected dividend yield for financial years 2015 to 2017 is expected to be 5 per cent to 6.5 per cent.

Innovalues is in talks with both existing and new automotive customers for new product orders, which will contribute more significantly in the 2017 financial year.


Broker: OCBC Investment Research

Call: Buy

Target Price: $1.27

QAF, a dominant player in the baked goods segment, commands 60 per cent of the market share in the packaged loaf bread segment in Singapore.

Its core manufacturing and distribution businesses with leading brands Gardenia and Bonjour hold strengths such as branding power, value-added product portfolio and extensive distribution networks.

Its profit after tax and minority interests has been steadier since the 2011 financial year versus a bumpy net profit performance.

Expansion of facilities and the extension of its distribution reach in other markets will help to drive growth.

The group is expected to at least maintain its dividend payout of five Singapore cents per share, offering a dividend yield of approximately 5 per cent.

A version of this article appeared in the print edition of The Straits Times on September 21, 2015, with the headline 'Brokers' Call: SIA ENGINEERING LIMITED'. Print Edition | Subscribe