SIA Engineering Company

[Contrarian]

Good solid yield generating company... > 6% yield at current price...

[changwk]

in FY 2010, a total of 30c was paid. This consists of 6c interim, 10c final and 14c special.
There is every indication that this dividend trend will continue in FY 2011. Cash stands at 388.9mil.
Cash flow is generating healthy cash flows.

assuming price of $3.72 and total dividend of $0.3. The dividend yield works out to be 8%

[Musicwhiz]

Good solid yield generating company... > 6% yield at current price...

Hi Contrarian,

Using last year's numbers and excluding the special dividend (which I consider as "one-off" and therefore inconsistent), total dividend per share would amount to just 20 cents, therefore yield at yesterday's closing price of $3.72 would be about 5.4%.

in FY 2010, a total of 30c was paid. This consists of 6c interim, 10c final and 14c special.
There is every indication that this dividend trend will continue in FY 2011. Cash stands at 388.9mil.
Cash flow is generating healthy cash flows.

assuming price of $3.72 and total dividend of $0.3. The dividend yield works out to be 8%

Hi Changwk,

It should be 14 cents final and 10 cents special. 2Q is normally when cash flow is the weakest, as evidenced by the -ve OCF generated, but cash flows from associates and JV has improved year on year.

It's best to compute yield without accounting for special dividend. Therefore, yield works out to be 5.4%.

[Contrarian]

MW, thanks for clarification...

It looks like the skies is rosy for them with all the airlines increasing the fleet...

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MW, thanks for clarification...

It looks like the skies is rosy for them with all the airlines increasing the fleet...

[Musicwhiz]

MW, thanks for clarification...

It looks like the skies is rosy for them with all the airlines increasing the fleet...

Hi Contrarian,

In the short-term, the weak economic climate may actually hurt their profits and cash flows as their JV and associated companies will be adversely affected. But I guess over the medium-term the Company should do OK.

There has also been not much updates on SIAEC forming new partnerships or JVs for line maintenance or MRO activities. Let's hope this absence of news does not indicate that Management is not as pro-active as before.

Cheers!

[Musicwhiz]

Business Times - 29 Oct 2011

SIA Engg's Q2 profit rises 7.1% to $71.2m

By NISHA RAMCHANDANI

SIA Engineering Company (SIAEC) posted a net profit of $71.2 million for the three months ended Sept 30, 2011, up 7.1 per cent from $66.5 million in the previous corresponding quarter.

Performance improved in the second quarter as share of profits from associated and joint-venture companies grew 7.1 per cent to $40.5 million and also due to a write-back of tax provision amounting to $3.1 million.

This is despite revenue falling from $277.1 million previously to $272.4 million in the second quarter. Earnings per share were 6.5 cents versus 6.11 cents in Q2 FY2010-11.

Group operating profit slipped 1.2 per cent to $34 million with the impact of the weaker greenback offset by exchange gains of $7.1 million from hedging and the revaluation of net US dollar-denominated assets.

For the first six months, net profit inched up 1.5 per cent to $139.3 million, while revenue dipped 2.7 per cent to $550 million on the back of lower revenue from materials.

Net profit for the first half included a write-back of $3.1 million in tax provision. Share of profits from associated and joint-venture companies increased marginally by 0.9 per cent to $77.7 million, accounting for about half of the group's pre-tax profits.

The company has declared an interim dividend of six cents per share for the half year ended Sept 30, 2011, payable Nov 29.

As at Sept 30, 2011, the group's cash balance stood at $388.9 million.

While SIAEC expects demand in the short term to remain stable, it noted that uncertainties in the global economic environment could hurt the aviation industry.

'We remain committed to staying lean and competitive to safeguard earnings. Vigilance on cost and efficiency management will remain key priorities. On the business side, our broad range of services and the group's network of joint ventures place us in an advantageous position to continue to capitalise on growth opportunities,' added SIAEC.

Shares in the company rose two cents to close at $3.72 yesterday.

[Musicwhiz]

The Straits Times
Oct 31, 2011
Company briefs

SIA Engineering

SIA Engineering Company's (SIAEC's) second-quarter net profit rose 6.4 per cent to $71.2 million, partly due to the higher share of profits from associated and joint-venture companies, compared with the same period last year.

Revenue for the three months ended Sept 30 inched up 1.7 per cent to $272.4 million.

Quarterly earnings per share came to 6.5 cents, 6.4 per cent higher than the same quarter last year.

The company declared an interim dividend of six cents a share for the half-year ended Sept 30, unchanged from last year.

SIAEC said demand for its businesses is expected to remain stable in the near term.

However, the prevailing global economic and financial uncertainties and concerns over a sovereign debt crisis in Europe will have an impact on the recovery of the aviation industry.

[Musicwhiz]

Dear all, Part 1 of my analysis and review for SIAEC's 1H 2012 results is now up on my blog. Please feel free to visit and leave comments, thanks!

A snippet as follows:-

"By observing the upcoming 3Q 2012 results, it will be possible to project if SIAEC will have sufficient cash generation ability to at least maintain its final dividend at 14 cents/share. Looking back at 3Q 2011, operating cash flow was very high at $77.7 million, investing cash flows was $39 million, while financing cash flows shows an outflow of $57.5 million (payment of interim dividend for 1H 2011). The net cash inflow turned out to be $53.2 million, which is decent. For 4Q 2011, operating cash flows were very strong at $80.5 million, investing cash flows were $39.5 million and financing cash flows showed an inflow of about $4 million. This adds up to about $124 million in additional cash for 4Q, and for two quarters alone the combined inflow was about $183.2 million. A final dividend of 14 cents would drain about $154 million in cash, and therefore it can be seen that the two quarters’ strong cash inflow could sustain this final dividend, with the special dividend being declared to reduce cash reserves which were considered in excess of working capital requirements."

[Musicwhiz]

Dear all, Part 2 of my analysis and review for SIAEC's 1H 2012 results is now up on my blog. Please feel free to visit and leave comments, thanks!

A snippet as follows:-

"In Sep 2011, SIAEC signed a letter of intent (meaning they have not gone to the contractual agreement phase yet; this is similar to a Memorandum of Understanding in that it is not yet legally binding) with Messier-Bugatti-Dowty (another subsidiary of the SAFRAN Group) towards appointing SIAEC as an Authorized Service Centre (ARC) for carbon wheels and brakes. According to its website (http://www.safranmbd.com), Messier-Bugatti-Dowty (MBD) is the world leader in aircraft landing and braking systems and on-ground movement, partner to the world’s leading civil and military air-framers. Interestingly, on Sep 29, 2011, SIA had selected MBD to supply wheels and carbon brakes for its Airbus A350 XWB fleet. This may explain why SIAEC had signed an LOI with MBD for a potential setting up of an ARC."

[corporatefatcat]

I enjoyed reading your analysis MusicWhiz, so do you think that with the budget long haul flights and so forth as mentioned in your blog there is room for organic growth?

Anyway on a side note, I really liked how you have cash flows and other data dating really far back, did you manually go through each Report to adjust and get this data, or did you get it off a program, eg. DBSVickers Clarity

But thanks for that, I am sure a lot of us can benefit and take away something from your analysis.

Also, what is worrying is the drastic drop in cash inflow, greatly reducing the FCF, and what if capex increases...
Was there a reason for this? Would a economic downturn and decreased tourism affect SIA Engineering's Cash flow.