(Stocks Discussion) SGX: SIA Engineering Company Ltd (SGX: S59)?

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Just sharing my current views about SIAEC in the short term. Although the company's share price has spiked (due to the vaccine and travel bubble), it is likely to show alot of weakness in the near term (2-3 years).​​​

While sia engineering is in a downturn due to improvement in mro technology where engines can be maintained attached to the wing, sia engg business is still generating a lot of cash flow and is a cash cow.

With sia owning a majority of the shares there is a possibility that sia may privatise it to take all the benefits of the cash generating ability. This is because sia has 3 billion in capex over the next few years for its airplanes. This is also why we are seeing sia engineering depleting it's cash reserves by giving 100-110% in payout ratio. Because it's parent company needs it

SIA engineering has faced some headwinds these past years, but has staged a turnaround in the past year as they have made improvements in the efficiencies of their business.

However, their business will continue to remain exposed to factors such overall Aviation trends, oil prices and Changi's competitiveness as an Aviation hub. The price has recovered from an almost 5 year low as of this point of writing, and if I were to enter, any position will be kept small. The potential is still there as Indonesia and China will fuel the bulk of air traffic growth in the AP region in the coming decade, and Singapore continues to strength its position as an aviation hub.

1) Stagnant revenues for the past 10 years

2) Margins dropping non stop from 2010

3) Making lesser and lesser profits (no growth)

I will pass