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Three Things To Like About SIA Engineering Company Limited

Siaec_logoPerhaps the first thing to like about SIA Engineering (SGX: S59) is that it is not an airline.

Even though its name is uncannily similar to SIA, otherwise known as Singapore Airlines (SGX: C6L), its relationship with flying is only tangential.

SIA Engineering doesn’t care if the plane in its hanger was previously full to bursting or as empty as a hermits address book. It maintains repairs and overhauls aircraft to ensure that they are fit to fly. The company sinks or swims by its reputation.

That is the first thing to like about the company – its reputation as a servicer of aircraft. Its status is reflected by its growing top-line revenues. Over the ten years, revenues at the company have doubled from around S$680m to almost S$1.2b.

Meanwhile, its profits have boosted its bottom-line. In the last decade, Net Income has nearly doubled from S$140m to S$250m.

The second thing to like about SIA Engineering is its geographic spread. Around three quarters of revenues is generated in East Asia. It also generates around a seventh of its turnover from Europe and the rest from South West Pacific, the Americas, West Asia and Africa.

The third thing to like about SIA Engineering is its Return on Equity of around 20%. That is more than twice the returns generated by the 30 companies that make up the Straits Times Index (SGX: ^STI). Its outstanding return is thanks to an outstanding Net Income Margin and an efficient use of assets.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Director David Kuo doesn’t own shares in any companies mentioned.