Sia Engineering Intrinsic Value – SIA Engineering Reaches Promising Pace of Recovery with S$32M Net Profit in 1HFY3/23.
February 12, 2023
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Sia Engineering Intrinsic Value – SIA ($SGX:S59) Engineering Company (SIAE) is a leading aircraft engineering and maintenance provider with a global presence. It is a subsidiary of Singapore Airlines, the country’s national carrier. The company provides a wide range of services for airframes, engines and components, as well as line maintenance and engineering support for customers in the aviation sector. SIAE recently reported a net profit of S$32M for 1HFY3/23, exceeding expectations. According to the company, this success was driven by increased joint venture contributions from additional engine inductions from customers in the aviation sector. The improved performance of SIA Engineering in 1HFY3/23 can be attributed to several factors. The company benefited from higher revenue due to increased fleet size, improved aircraft utilization and the introduction of new services such as integrated line maintenance and engineering support.
In addition, SIAE also capitalized on new opportunities such as the repair and overhaul of engines for new aircraft types, which provided additional sources of income. The strong performance in 1HFY3/23 is expected to continue in coming quarters. The company is focusing on expanding its customer base and offering more advanced services such as 3D printing and digital solutions to further tap into the aircraft maintenance market. Furthermore, the company is also investing in digitalizing its operations and improving its safety standards to ensure customers are satisfied with its services. The company is well-positioned to capitalize on new opportunities in the aviation sector and this should help it to sustain its success in the long-term.
Price History
News of SIA Engineering‘s recovery has been mostly positive so far. On Monday, the stock opened at SG$2.5 and closed the day at the same rate, which was a 0.4% decline from its previous closing price of SG$2.5. The global pandemic has caused a sustained disruption to the aviation industry, leading to a decline in profits and revenues for many airlines and their suppliers. Despite this, SIA Engineering has managed to remain afloat and even achieve a net profit of S$32 million in the 1HFY3/23 period. This is largely due to the strong operating performance of their engineering services and higher contributions from their joint ventures and associates. The company has adjusted to the new normal by introducing innovative digital solutions and streamlining their operations. These measures have enabled them to improve efficiency and reduce costs, while keeping their customers satisfied.
This is evidenced by SIA Engineering continuing to secure Singapore Airlines as its largest customer. The company has also managed to bolster its balance sheet through strategic investments and divestments. This includes selling off their stake in ST Engineering Subsidiary, ST Kinetics, as well as divesting from their substantial stakes in AMEC, an aircraft maintenance and engineering services provider. SIA Engineering’s strong performance shows that the company is on a promising path towards complete recovery from the impact of the pandemic. Their ability to remain resilient throughout these challenging times is a testament to their future success despite a difficult environment. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Sia Engineering. More…
| Total Revenues | Net Income | Net Margin |
| 664.77 | 75.07 | 12.7% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Sia Engineering. More…
| Operations | Investing | Financing |
| -26.29 | -18.55 | -37.79 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Sia Engineering. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 1.94k | 243.57 | 1.5 |
Key Ratios Snapshot
Some of the financial key ratios for Sia Engineering are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| -13.4% | -0.0% | 9.1% |
| FCF Margin | ROE | ROA |
| -12.0% | 2.5% | 2.1% |
Analysis – Sia Engineering Intrinsic Value
GoodWhale has conducted a financial analysis of the stock of SIA Engineering, a Singapore-based company. According to their proprietary Valuation Line, the fair value of SIA ENGINEERING shares is estimated to be around SG$2.5. This valuation is slightly higher than the current market price of SG$2.5, suggesting that the stock is currently overvalued by 1.1%. The analysis conducted by GoodWhale considers the various factors that could affect the company’s share price, such as its financial performance, industry trends, and macroeconomic conditions. It also takes into account the company’s underlying fundamentals, including management decisions, operational efficiencies, and its competitive advantage in the market. Investors should be aware that although the current price of SIA ENGINEERING stock is slightly overvalued, it may not remain so in the long run. As the market reacts to changing economic and market conditions, the share price may move up or down from its current level. Therefore, investors should consider all these factors before making any investment decisions. More…
Peers
It has a strong presence in Asia Pacific and competes with the likes of Atlas Air Worldwide Holdings Inc, Turk Hava Yollari AO, International Container Terminal Services Inc.
– Atlas Air Worldwide Holdings Inc ($NASDAQ:AAWW)
Atlas Air Worldwide Holdings Inc. is a leading global provider of outsourced aircraft and aviation operating services. It is the world’s largest provider of ACMI freighter services and also operates a fleet of B747, B767, and B777 freighters on behalf of major airlines around the globe. The company has a market cap of $2.84 billion and a return on equity of 15.36%. Atlas Air Worldwide Holdings Inc. also provides charter and ad hoc cargo services, and is a leading provider of military airlift services to the U.S. government.
– Turk Hava Yollari AO ($OTCPK:TKHVY)
Turkey’s flag carrier and largest airline, Turkish Airlines (THY) is headquartered in Istanbul. The airline flies to more than 300 destinations in over 120 countries.
As of 2022, Turkish Airlines has a market cap of $8.3 billion and a return on equity of 21.48%. The company has been profitable every year since 2010, and reported a profit of $1.1 billion in 2020.
– International Container Terminal Services Inc ($PSE:ICT)
As of 2022, International Container Terminal Services Inc has a market cap of 367.49B and a Return on Equity of 59.1%. The company operates a network of container terminals around the world and provides container handling services.
Summary
SIA Engineering has seen a promising rate of recovery in the first half of its fiscal year, with a net profit of S$32 million. Investor sentiment towards the company has been overwhelmingly positive, with analysts emphasizing the company’s ability to respond quickly to changing market conditions and leveraging its strong financial position. The stock has performed well over the past few months, and signs are pointing to continued growth in the near future. Investors can expect a strong return on their investments in SIA Engineering, which boasts a strong balance sheet and a deep pool of engineering expertise.
