SIA Engineering stands to benefit from new comprehensive services agreements signed with Singapore Airlines and Scoot recently, OCBC Investment Research's Ada Lim says in a research report.

Based on the maintenance, repair, and overhaul services provider's announcement on the Singapore Exchange, the agreements are expected to generate a total labor revenue of S$1.3 billion over two years.

This translates to a significant labor revenue step-up of 54.7% per annum when compared to the previous agreements, the analyst estimates.

OCBC updates its model to incorporate the new contracts, and raises the stock's fair value estimate to S$3.00 from S$2.64 with an unchanged buy rating.

SIA Engineering soars 4.63% at 3:01 pm, Jun 5th.