SIA Engineering

[BlackCat]

Breakout on high vol, after 5 months flat. Large scale C&H. Vested.

[kennynah]

wow..isnt that a beautiful cup&handle formation.... load up man !!!

[winston]

Not vested.

SIA ENGINEERING - SIA Engineering Co posted an 11.1 per cent year-on-year drop in net profit to S$56 million for the third quarter ended Dec 31.

[millionairemind]

May 14, 2010, 5.37 pm (Singapore time)

SIAE's Q4 up 12.8%, FY2010 slips

By NISHA RAMCHANDANI

SIA Engineering Company (SIAEC) posted a 12.8 per cent year-on-year increase in net profit to $73.9 million for the fourth quarter ended 31 March 2010, as a result of a write-back of tax provisions by an associated company and surplus on disposal of fixed assets.

Revenue rose 10.9 per cent to $272.6 million for the quarter on the back of its fleet management programme and airframe and component overhaul work.

Earnings per share were up 12.5 per cent to 6.85 cents.

For the full year ended 31 March, net profit fell from $260.6 million to $236.1 million, while revenue slipped from $1.045 billion to $1.006 billion.

The board is recommending a final dividend of 13 cents per share bringing the total dividend payment for FY2009/10 to 18 cents per share. If the final dividend is approved by shareholders at the annual general meeting on 23 July, the dividend will be paid on 11 August.

SIAEC said that future business outlook was favourable, given the rebound in travel demand and increase in flights at Changi Airport.

It added: 'The group continues to strengthen its competitiveness by investing in servicing new engine types, strategic joint ventures and infrastructure development.'

[Musicwhiz]

Dear all, Part 1 of my Analysis of Purchase for SIA Engineering is now up on my blog! Please feel free to visit and leave comments, thanks!

A snippet as follows:-

"SIAEC’s Balance Sheet is very interesting as it contains no debt at all! One would have expected that a leading MRO player with technical capabilities would need to invest in a lot of fixed assets and hence would need a lot of gearing, but for SIAEC this is not true and this also adds to its attractiveness as an investment. Contrast this to ST Aerospace (Part 4 of this analysis) which has quite a bit of debt in its books. Apparently, capex is very manageable for the Group and is low compared to its revenues, and thus there is no need for leverage as internally generated cash flows (I will come to that in a while) are more than sufficient to cater for expansion, strategic alliances as well as staff salaries; with a lot to spare!"

[Chinaman]

well SIA Engrg is a good company BUT a bit late in spotting this counter....since mar'10 been monitoring this counter when it was aro 3.50....now at 4.30 to me abit expensive no point dipping in.... this is wat i gather from my stock guru peers.

Anyway, Not vested.

[cif5000]

Today closed at 4.38. Dunno how high it can go but the price now is almost at its historical high. I am thinking to sell mine. No doubt the current yield is better than the banks but it is no longer that fantastic anymore. Furthermore, it's 3.5PB. I don't want to talk about the chart because someone may fall off the chair again and go to the hospital. I don't want to pay for her hospitalization fees.

[helios]

[winston]

Somebody was telling me that they had a lot of business from cleaning the jet engines from the volcanic ash in Iceland...

Now that the volcano is no longer spewing ash, does that mean business is no longer that brisk ?

Not vested

[Musicwhiz]

Today closed at 4.38. Dunno how high it can go but the price now is almost at its historical high. I am thinking to sell mine. No doubt the current yield is better than the banks but it is no longer that fantastic anymore. Furthermore, it's 3.5PB. I don't want to talk about the chart because someone may fall off the chair again and go to the hospital. I don't want to pay for her hospitalization fees.

From your perspective, I would say it would make good sense to divest if you are sitting on >250% profits, since the yield from holding it may not come close to the capital gains. From my understanding, you had purchased SIAEC at its low during March 2009. Your research on the Company (by comparing it with SATS and later HAECO) was very good, but I was wondering why you did not buy more of SIAEC at the time? Was it due to the fact that you wanted to diversify rather than concentrate your monies on just one company? Would love to hear your views on this.

I think if you look at it from a "chart" perspective, SIAEC is definitely trading at its 52-week high of S$4.38 now. Notwithstanding, I have evaluated the business aspects of the Company and the valuation is justified in view of its strong business model, consistent cash flows and steady growth. Definitely PER is somewhere close to 14x and as you mentioned, P/B is 3.5x. Do note, however, that high P/B ratios often accompany companies which are generating consistently high ROE with little or no debt, and hence there is a premium placed on the value of the business franchise which far exceeds the book value of its assets (which no doubt are accounted for using historical cost). I was actually a little surprised when you mentioned charts as I had assumed you were purely a fundamental investor; then again I am not so astute in such matters and this may have been a mistake of mine for which I apologize in advance (if I had got it wrong).

The current yield on a historical basis is about 4.11% (18 cents divided by last done share price of S$4.38), which is still better than any bank deposit you can find out there. Assuming the business grows, there is a chance of a further increase in dividends. I would think that since your dividend yield should be 10% or even greater (based on your cost), why not just hold this for superior yield?