Core Viewpoint - SIA Engineering Company Ltd (SIAEC) has experienced a significant share price increase of approximately 43% year-to-date, driven by strong financial performance and industry recovery in aviation services [1][3]. Background - SIAEC is the maintenance, repair, and overhaul (MRO) division of Singapore Airlines, providing services to over 80 international carriers and aerospace equipment manufacturers [1][2]. Recent Performance - The share price reached S$3.41, nearing a 52-week and five-year high - Revenue for the first fiscal quarter (1Q FY5/26) increased by 33.4% year-on-year to S$358.4 million - Operating profit surged by 410% to S$5.1 million, with an operating margin improvement from 0.4% to 1.4% - Net profit rose by 29.2% year-on-year to S$42.9 million, bolstered by profits from associated and joint venture companies - MRO demand remained steady, with flights handled increasing by 3.5% year-on-year to 39,458 - The company resumed dividend payments in FY22/23, with a cumulative dividend of S$0.225 per share since then [3][4][5]. Growth Drivers - The share price rally is supported by several growth factors, including: - Recovery in travel and passenger movements at Changi Airport, which handled 67.7 million passengers in 2024, a 15% increase year-on-year - Ongoing construction of a fifth terminal and new city links at Changi Airport, contributing to sustained demand for MRO services - Strategic partnerships and joint ventures with companies like Pratt & Whitney and Rolls-Royce, enhancing service demand - Cost management initiatives leading to improved productivity and reduced operating costs, reflected in the operating margin increase [6][7][8][9]. Overall Verdict - SIAEC's strong fundamentals and favorable industry trends position it as a solid investment opportunity in the aviation services sector, despite potential risks [13][14][15].