SIA Engineering Company

[shanrui_91]

SIA Engineering has just released its 1H FY 2013 results.

Highlights:-

1) Revenue +6.4% to $585m for 1H FY 2013
2) Operating Profit -3.9% to $66m, due to higher staff costs
3) Profit attributable to shareholders -1.5% to $137.2m
4) EPS -2% to 12.47 cents/share
5) Interim dividend was raised from 6c/share last year to 7c/share
6) OCF = $42m for 1H 2013, against $20.7m for 1H 2012
7) FCF = $92.8m for 1H 2013, against $60.9m for 1H 2012, due in part to better dividends received from JV and associates

(Vested)

With regard to the dividend, "To achieve a better balance between the interim and final dividends, the Company has declared a
higher interim dividend of 7 cents per share, an increase of 1 cent per share from the previous year.". So it is likely to be a transfer from final dividend to interim as this was a point that management say they will consider during the agm

JV continues to perform really well while associate suffers a decline. Hopefully, it is a transfer of income from ESA to SAESL and not due to any other associate. Most importantly, the company is still receiving strong dividend from its jv, associate and investment.

In addition, "Performance for the current period
was impacted by an exchange loss of $3.7 million compared to an exchange gain of $8.6 million in
the last year." Else we will be expecting a slightly stronger performance. I expect them to continue suffer from the depreciating USD and appreciating SGD.

(vested)

[Musicwhiz]

If SIAEC's cash flow continues to be strong and healthy, there's no reason they cannot maintain 15c final dividend, in spite of what they've said.

Worst case I hope is that they maintain full year-dividend unchanged at 21c (implying a 14c/share final dividend).

[csl123]

If SIAEC's cash flow continues to be strong and healthy, there's no reason they cannot maintain 15c final dividend, in spite of what they've said.

Worst case I hope is that they maintain full year-dividend unchanged at 21c (implying a 14c/share final dividend).

With SIA acquiring 10% of Virgin Australia, I am surprised that the interim dividend is not at 8 - 10 cents.

[Musicwhiz]

Just received SIA Engineering's 7c/share interim dividend in my bank account today. Pleased that I have additional savings this month for my cash stash for investment deployment.

[Musicwhiz]

It would seem that Kim Eng have nothing better to do than to publish a report on SIA Engineering, with an "upgraded" target price simply based on "relative valuation"!

SIAEC closed at a 52-week high today of $4.43 and its dividend yield is now slightly less than 5%, if we assume a FY 2013 dividend of 22 cents/share (interim already paid was 7c/share, last year's final was 15c/share).

Please see attached for report.

[Musicwhiz]

OCBC jumping into the fray as well - can't let Kim Eng enjoy all the fun right?

Link: http://www.ocbcresearch.com/Article.aspx...3234_76633

[Musicwhiz]

The Straits Times
www.straitstimes.com
Published on Jan 07, 2013
Changi clears land to park more planes
Move will boost airport's capacity by over a fifth and cater for growth

By karamjit kaur aviation correspondent

CHANGI Airport is clearing a plot of land - the size of over 40 football fields - to park more than 30 single-aisle planes.

This will boost its current capacity by more than a fifth and cater for future growth.

Last year, the airport handled an all-time high of more than 50 million passengers.

Sited along a stretch of land where Terminal 3 is and across a road from where Terminal 4 will be built, the 38.5ha area currently houses a plant nursery, a reservoir and a pond.

The nursery will be relocated in the second half of the year, Changi Airport Group spokesman Ivan Tan told The Straits Times. The reservoir and pond will be backfilled.

To prepare for continued growth, the airport is also expanding terminals and its ability to handle more flights.

The Budget Terminal, closed last September, will be torn down next month to make way for Terminal 4. The facility, to be ready by 2017, can handle up to 16 million passengers a year, compared to the Budget Terminal's seven million.

Terminal 1 will be expanded to boost its annual passenger capacity from 21 million to 24 million.

Measures are also being introduced to better utilise Changi's two runways to handle more aircraft movements.

Airlines operating at Changi said the priority is to ensure that customers - who will pay a higher departure charge from April - have a good experience.

Tiger Airways, the biggest airline operating at the Budget Terminal before it closed, is keen to find out what Terminal 4 has to offer, said its chief executive Koay Peng Yen.

"What's important for us is that the new facility should be integrated with the other terminals so there is seamless connectivity and transfer for our customers."

Previously, those who wanted to transfer from the Budget Terminal to the main airport about 2km away had to use shuttle buses plying public roads.

Tiger passengers who had connecting flights had to collect their bags on arrival and check in again at the main terminal.

Though Terminal 4 will be sited away from the other three terminals, convenient transfers are possible, say, with low-floor buses that are easier to get on and off.

They can also ply a dedicated route instead of having to stop at traffic lights, Mr Koay suggested.

Plans for Terminal 4 are still being finalised, Mr Tan said.

As Changi's traffic continues to grow, airlines also question if passengers will have to board a bus to get to their plane.

Mr Tan said: "As aircraft movements grow... we can expect a corresponding increase in remote parking of aircraft and bussing of passengers over the long term."

This is done in many major airports such as London's Heathrow and Tokyo's Narita, he added.

karam@sph.com.sg

[Musicwhiz]

Kim Eng has come up with an Aviation Services report as follows:-

http://www.remisiers.org/cms_images/rese...601131.pdf

Where SIA Engineering and SATS are mentioned. Global MRO growth is expected to be around 2.8% CAGR till 2022, and this will bode well for SIA EC in the medium-term. Growth of LCC and airprot traffic at Changi Airport will also boost MRO services for SIAEC.

Note that KE are a little over-optimistic on SIAEC TP. But their projections for DPS seem realistic - +1c/share every financial year starting from a projected 22c/share for FY 2013 (ended March 31, 2013). At current price of $4.71, this is a yield of about 4.67%.

[Contrarian]

At a yield of 4%, share price will be $5.50.... :-)

[Musicwhiz]

At a yield of 4%, share price will be $5.50.... :-)

I don't see a good reason why it should trade at 4% yield at the moment. SIAEC traditionally has traded around 5% yield.