Positive Outlook for SIA Engineering Co. with New Contract Boosting Earnings and Share Price

Analyst Raymond Yap from CGS-CIMB reiterated a Buy rating on SIA Engineering Co (SEGSF – Research Report) and increased the price target to S$3.10 from S$2.70.

Raymond Yap has given his Buy rating due to a combination of factors that highlight the positive outlook for SIA Engineering Co. The company has secured a new contract with SIA and Scoot, which began on April 1, 2025, resulting in a significant 55% increase in chargeable labor revenue. This contract is expected to substantially enhance the company’s earnings, with a projected 35% gross increase in core earnings per share for the fiscal year 2026. However, the net enhancement is anticipated to be around 15% due to potential setup costs for new ventures.
Moreover, the annual chargeable manhours for SIA Engineering Co. are set to rise significantly, contributing to a total labor revenue of S$1.3 billion over the two-year term of the contract. This increase is driven by both higher manpower charge-out rates and an increased volume of work. The company’s share price has already seen a positive reaction, rising by 4.5%, and further rerating is expected as the market digests the benefits of the new contract. Potential catalysts for continued positive performance include the upcoming release of the first-quarter results for fiscal year 2026, where the impact of the new contract could become more evident.

According to TipRanks, Yap is ranked #4390 out of 9537 analysts.

In another report released on May 21, DBS also maintained a Buy rating on the stock with a S$2.80 price target.