SIA Engineering Company

[shanrui_91]

The reason why sia engineering is fairly resilient lies in the fact that a,b,c,d checks of aircraft are highly regulated (In singapore, it is the CAAS). These are to be performed regularly. For e.g. for boeing 747-400, A check is done every 500 flight hours, B check is done around every 6-9 months, C check is around 15 months and D check is around 5 years.

When the economy is good, airlines order more aircrafts to compete for the pie. But when recession comes, they are not able to sell or decommission them and has to undergo checks even if they are not flying as the regulation is in flight hours or time period, whichever is earlier. Thus, the fiercer the comeptition is in airlines, the better it is for them on the condition that you mention that they don't go bankrupt.

[camelking]

The reason why sia engineering is fairly resilient lies in the fact that a,b,c,d checks of aircraft are highly regulated (In singapore, it is the CAAS). These are to be performed regularly. For e.g. for boeing 747-400, A check is done every 500 flight hours, B check is done around every 6-9 months, C check is around 15 months and D check is around 5 years.

When the economy is good, airlines order more aircrafts to compete for the pie. But when recession comes, they are not able to sell or decommission them and has to undergo checks even if they are not flying as the regulation is in flight hours or time period, whichever is earlier. Thus, the fiercer the comeptition is in airlines, the better it is for them on the condition that you mention that they don't go bankrupt.

Something like the 5 year drydocking for vessels...
By the way, any ideas which listed co does drydocking?
Sounds like a stable business to me..

[Nick]

The reason why sia engineering is fairly resilient lies in the fact that a,b,c,d checks of aircraft are highly regulated (In singapore, it is the CAAS). These are to be performed regularly. For e.g. for boeing 747-400, A check is done every 500 flight hours, B check is done around every 6-9 months, C check is around 15 months and D check is around 5 years.

When the economy is good, airlines order more aircrafts to compete for the pie. But when recession comes, they are not able to sell or decommission them and has to undergo checks even if they are not flying as the regulation is in flight hours or time period, whichever is earlier. Thus, the fiercer the comeptition is in airlines, the better it is for them on the condition that you mention that they don't go bankrupt.

Something like the 5 year drydocking for vessels...
By the way, any ideas which listed co does drydocking?
Sounds like a stable business to me..

Marco Polo Marine

http://marcopolo.listedcompany.com/newsr...B7F4.1.pdf [SGX Announcement]

(Not Vested)

[yogi]

What if aircrafts are grounded during tough economy time, no checks A type?

[FFNow]

What if aircrafts are grounded during tough economy time, no checks A type?

My take is that the aircrafts still have to go through all the maintenance checks even if it's during a recession. If they don't go through the scheduled maintenance inspections, they are not considered airworthy and thus can't fly in the air. It is mandatory to do regular maintenance on aircraft before they can accept passengers on board. It's lives we are talking about here.

[shanrui_91]

checks are performed on a flight hour basis or a calendar system basis whichever is earlier. A cut in number of plane flight will do little harm to MRO revenue.

The easiest way to skip the check is perhaps to decommission the plane but this is applicable only for the old plane. This can be a normal practice as D check is often very expensive in comparison to the existing value of the aircraft.

For as long as the airplane don't fly (grounded) they can skip the inspection. but how long can the firm be doing so, given that this plane does not comes cheap and that they still have to record a depreciation expense for it? Aircrafts are depreciated over 15 years period for SIA, which means that grounding it for a year or 2 represent a 6-12% loss in terms of ROI for that particular aircraft. This is not forgetting that when they decide to deground it, it has to undergo all these previous checks before it can do so.

Let's face the fact that grounding airplane has limited impact to the company profitability as compared to cutting the number of flights. The major cost to the airline are fuel cost and staff cost. Grounding the airplane only help in skipping the inspection cost temporarily but the airplane still has to be maintained by their own fleet of engineers unless they planned to decommission the plane completely. Grounding airplanes also mean additional strain on the existing fleet.

FYI, in the previous GFC 2008, a total of 5% of global aircraft get grounded.

(vested)

[KopiKat]

I like Slow / No Growth stocks which gives a minimum 4% to 5% Dividend Yield. After checking the figures from this simple Table, I also got vested. What I liked,

1) Consistent Regular Revenue + EPS
2) NPM ~ 20%+
3) Cash ~ $400Mil
4) Negligible Debts
5) Dividend Payout ~ 85%
6) Yield >5% (even without FY11 Special Div)

It's rather illiquid though and it took me a while to collect a tiny stake without having to chase the price up (Yes, volume is usually that low). Unfortunately for me, it'd continued moving up a couple of cents every few days and I'd not been able to build up a more meaningful stake. Even today, with STI almost -60, it still refused to correct! Gotta be very patient here.

Results are out. It's within my expectation.

EPS = 24.56ct vs 23.77ct (FY11)
Div = 15ct vs 14ct + 10ct (Special) FY11

Press Release
Financials

[Musicwhiz]

The results were within expectations, with net profit attributable to shareholders up slightly, and a slight recovery in the profits from associated companies and JVs. For FY 2012, the dividends received from assoc and JVs were lower than for FY 2011; so what surprised me was when SIAEC declared a higher final dividend of 15c/share as compared to 14c/share for FY 2011. This brings full year dividend for FY 2012 to 21 cents/share, a record for SIAEC (excluding any effects of special dividends).

At today's closing price of $3.99, this represents a historical yield of 5.26%.

What's more important going forward is whether SIAEC continues to pursue its steady expansion in its stable of JVs and collaborations. It can also grow its Line Maintenance division and the introduction of Scoot and more low-cost airlines will also drive demand for MRO. With a clean Balance Sheet and very strong FCF, SIAEC should be poised to grow, albeit slowly.

Payout ratio for FY 2012 is about 85%, and this is in-line with FY 2010 (82.5% payout) and FY 2011 (83.7% payout excluding special dividend). Moving forward, assuming more cash flows in through ICF, there should be a chance for SIAEC to raise its interim dividend, which has remained constant for 2 consecutive financial years.

The dividend will be paid on August 10, 2012.

[Temperament]

The results were within expectations, with net profit attributable to shareholders up slightly, and a slight recovery in the profits from associated companies and JVs. For FY 2012, the dividends received from assoc and JVs were lower than for FY 2011; so what surprised me was when SIAEC declared a higher final dividend of 15c/share as compared to 14c/share for FY 2011. This brings full year dividend for FY 2012 to 21 cents/share, a record for SIAEC (excluding any effects of special dividends).

At today's closing price of $3.99, this represents a historical yield of 5.26%.

What's more important going forward is whether SIAEC continues to pursue its steady expansion in its stable of JVs and collaborations. It can also grow its Line Maintenance division and the introduction of Scoot and more low-cost airlines will also drive demand for MRO. With a clean Balance Sheet and very strong FCF, SIAEC should be poised to grow, albeit slowly.

Payout ratio for FY 2012 is about 85%, and this is in-line with FY 2010 (82.5% payout) and FY 2011 (83.7% payout excluding special dividend). Moving forward, assuming more cash flows in through ICF, there should be a chance for SIAEC to raise its interim dividend, which has remained constant for 2 consecutive financial years.

The dividend will be paid on August 10, 2012.

i had B 2008/2009 and took profit 2010 or 2011. Its was too much for me to resist. Then i B 5 lots > $4+. i like this counter for steady growth and good dividend income. i am trying to average down but the 52WK L is still not attractive enough for me. Anyway, the price hardly goes there. Meanwhile i enjoy the dividend. Its definitely better than SMRT and POSB in current market status of the companies.
Caveat Emptor.

[Drizzt]

wow that must be really great 2008 to 2011.