SIA Engineering Company

Ahhh... Dividends should be pretty decent, I'm thinking... Let me see if any of my colleagues are attending...

(19-04-2011, 04:02 PM)Jon-san Wrote: Ahhh... Dividends should be pretty decent, I'm thinking... Let me see if any of my colleagues are attending...

OK, thanks!

I am expecting 14 cents/share final dividend. Last year it was 13 cents/share.

Total of 24 cents/share dividend declared! Shareholders can rejoice!

hmm the total payout for the entire FY is 30 cents/share. it is an almost 100% payout ratio and slightly more than cash inflow..

why is the company being so generous? is its prospects so bad that it feels it is better to return cash to shareholders?

(10-05-2011, 06:56 PM)yaosheng Wrote: hmm the total payout for the entire FY is 30 cents/share. it is an almost 100% payout ratio and slightly more than cash inflow..

why is the company being so generous? is its prospects so bad that it feels it is better to return cash to shareholders?

No worry, this company occasionally will give good dividend when the year is good. They have been doing that in the past years if you look at 2006 & 2004.

In term of generosity, they treat their own staff much better than shareholder, giving big performance bonus year after year in profit sharing scheme. Always leave me a sour taste :p

(10-05-2011, 06:56 PM)yaosheng Wrote: hmm the total payout for the entire FY is 30 cents/share. it is an almost 100% payout ratio and slightly more than cash inflow..

why is the company being so generous? is its prospects so bad that it feels it is better to return cash to shareholders?

I took a look at SIAEC's FY 2011 results. I am very pleased with the results as well as the 14 cents/share final dividend and 10 cents/share special dividend, making it a total of 24 cents/share.

There are several reasons to justify the payment of the special 10 cents/share dividend.

Take note that for FY 2011, cash flows from operating activities nearly doubled compared with FY 2010 (at S$218.8M versus S$110M). This is an attestation to SIAEC's track record of generating very strong +ve operating cash flows.

Capital expenditure was only minimally higher compared to FY 2010, at S$44.6M versus S$39.6M, which means FCF was much stronger for FY 2011 as compared to FY 2010. Dividends from associated companies and JV has continued to climb to $165.3 million from $153.4 million a year ago, and has hit a record high since listing as SIAEC expands their list of JV and Associated Companies.

Share of profits from both JV companies and assoc companies (from income statement) has also increased to $144.4 million from $129.7 million a year ago. Note that though share of profits has fallen since the peak of $173 million in FY 2009, the cash inflows from dividends has steadily risen and hit an 11-year high since listing.

If we look at SIAEC's dividend trend, FY 2011 represents the recovery in term of payment of total dividend as the last time 20 cents/share was paid was in FY 2008. FY 2009 was 16 cents and FY 2010 was 18 cents. Assuming the recovery gains firmer ground and SIAEC's JV and assoc companies do well, I can see more prospects of a higher interim/final dividend, perhaps bringing the total for the year to a new high of perhaps 22 cents/share?

Note too that special dividends have only been paid 3 times since SIAEC's listing, once in FY 2004 (20 cents, for a total of 24 cents that year), FY 2006 (20 cents, for a total of 30 cents that year); and for FY 2011 (10 cents, for a total of 30 cents). This can be justified by looking at their cash balances @ year-end. For FY 2004, cash balance was $472M, then a record 4-year high; for FY 2006, cash balance hit $500.6M, a six-year high then.

For FY 2011, cash balances as at March 31, 2011 hit an 11-year high at $581.4 million. Thus, the payment of a special dividend occurs every time cash hits a new high. I had blogged about the possibility of a special dividend back then during my analysis of purchase Part 1 of SIAEC a while back in Sep 2010. The link can be found here (under the "dividends" section):-

http://sgmusicwhiz.blogspot.com/2010/09/...chase.html

(Vested)

(10-05-2011, 07:20 PM)hongonn Wrote:

(10-05-2011, 06:56 PM)yaosheng Wrote: hmm the total payout for the entire FY is 30 cents/share. it is an almost 100% payout ratio and slightly more than cash inflow..

why is the company being so generous? is its prospects so bad that it feels it is better to return cash to shareholders?

No worry, this company occasionally will give good dividend when the year is good. They have been doing that in the past years if you look at 2006 & 2004.

In term of generosity, they treat their own staff much better than shareholder, giving big performance bonus year after year in profit sharing scheme. Always leave me a sour taste :p

I emphatically and vehemently disagree with what you have mentioned in this post. And that is all I'm saying on this subject. Thanks.

Business Times - 11 May 2011

SIAEC unveils generous payout

Q4 net profit falls 17.6% in absence of disposal gain; full year earnings up 9.5%

By VEN SREENIVASAN

DESPITE a 17.6 per cent fall in fourth-quarter earnings to $61 million, a figure which was distorted by an asset sale last year, SIA Engineering Company (SIAEC) posted a respectable 9.5 per cent full year earnings growth to $258.5 million.

The group's Q4 results a year earlier had benefited from a gain on disposal of fixed assets, write-back of tax provisions by an associated company and jobs credit.

But shareholders are likely to be delighted by the company's decision to pay a generous final dividend of 24 cents per share. This comprises a normal dividend of 14 cents, plus a special dividend of another 10 cents.

Together with the interim dividend of 6 cents, total dividend paid out by SIAEC for the year ended March 31, 2011, totalled 30 cents per share.

The company will pay out some $262 million in dividends on Aug 11.

Revenue for Q4 was flat at $272 million. But for the full year, revenue was up 10 per cent at $1.11 billion.

Share of profit from joint venture companies and associates rose 18 per cent in Q4 to $33.5 million. For the full year, this profit component grew 11.3 per cent to $144.4 million.

Basic earnings per share for the year rose 8.6 per cent to 23.77 cents.

The Singapore Airlines subsidiary had no borrowings and the cash balance of some $581.4 million at end-March - an increase of $155.6 million or 36.5 per cent compared to a year earlier.

Total assets grew 4 per cent to $1.62 billion.

In a statement accompanying its results, SIAEC said near-term demand for its core businesses comprising line maintenance, airframe and component services and fleet management, would be sustained.

'Reflecting the recovery of the engine and component business, the business volumes of our joint ventures are expected to grow,' it stated. 'Nevertheless, the prevailing economic environment, including the weakness of the US dollar, continues to pose challenges. The group continues in its efforts to improve productivity and manage costs. Our broad range of services, diversified operations and our continuing drive to deliver outstanding quality remain our key strengths.'

SIAEC, which is 80 per cent controlled by SIA, has aggressively expanded its network of joint ventures and associates around the region. Earlier this month, it inked a deal with Sagem (SAFRAN Group) to launch a state-of-the-art avionics facility in Singapore. The new facility of Safran Electronics Asia (SEA), owned 49 per cent by SIAEC and 51 per cent by Sagem, supports the latest aircraft types and is designed for expansion of capabilities to handle next-generation aircraft, such as the B787 Dreamliner and the Airbus A350.

The company has a client base of more than 80 international carriers and aerospace equipment manufacturers and provides line maintenance services at Singapore Changi Airport for more than 60 international carriers, as well as airframe and component overhaul on some of the most advanced and widely used commercial aircraft in the world.

Its gets almost 80 per cent of revenue from non-SIA clients.

The stock rose 8 cents to $4.26 yesterday.

Dear all, my analysis and review of SIAEC's FY 2011 Financials is now up on my blog. Please feel free to visit and leave comments, thanks!

A snippet as follows:-

"EPS is 23.89 cents/share and the company is valued at a historical PER of about 17x. ROE is higher at 19.8% compared to 18.7% a year ago, and this was largely achieved through the use of low and minimal debt on its Balance Sheet."

There were 2 recent news reports of landing gear problem:
- SIA Airbus A380-800 turned back to Hong Kong on 5 Jun 2011
- Quantas Boeing 747-400 returned to Singapore on 4 Jun 2011
Does anyone know which company or companies serviced the aforementioned aircrafts?

There is always a perennial risk to invest in airline/airline servicing company. As a retail investor, I do not have sufficient industry knowledge to appreciate the risk.