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The Investing Pros and Cons With Singapore Airlines Ltd: The Positives

When we’re looking at a company as a potential investment choice, it is important to take note of both the positives and negatives with the business.

Doing so helps ensure that we’re not missing out on anything important that could impact our investment.

With the above in mind, I want to run through some of the positives as well as negatives with Singapore Airlines Ltd (SGX: C6L) so that investors can have a useful investing overview. As one of the largest companies in Singapore’s stock market with a market capitalisation of S$11.8 billion, Singapore Airlines may be a company that many investors are curious about.

In this piece, I will be going through the positive aspects about Singapore Airlines. You can find the negative side of things about the company here.

A diversified income base

Singapore Airlines does not just fly passengers around. It has diversified its business through activities such as aircraft-related engineering services and cargo operations. These non-passenger businesses made up over 30% of Singapore Airlines’ total profit in its financial year ended 31 March 2016 (FY2015/16).

Moreover, Singapore Airlines is also diversified geographically with income coming from regions such as East Asia, Europe, South West Pacific, Americas, and West Asia and Africa.

Balance sheet that has more cash than debt

As I mentioned in my article on the investing-cons with Singapore Airlines, airlines generally have a high level of fixed costs. If an airline has a balance sheet that has minimal debt, it helps to offset some of the associated risks. Having a strong balance sheet allows an airline to withstand potential short term challenges such as economic downturns and competition and not lose focus on its longer-term strategies.

This seems to be the case with Singapore Airlines. As of 30 September 2016, the company has S$3.28 billion in cash & equivalents but total borrowings of just S$1.16 billion.

Dividend history

Despite operating in a challenging business environment, Singapore Airlines has never stopped paying an annual dividend in its last 10 completed fiscal years.

In fact, even in one of its worst years – FY2009/10 – when its profit fell from S$1.06 billion to S$216 million, Singapore Airlines still paid a dividend, albeit at a lower rate.

A Foolish take

The above are a few of the investing-pros associated with Singapore Airlines. I may have missed out on other pertinent aspects of the company’s business, but I still hope the information presented here can be useful for any of you who are either investors in Singapore Airlines or potential investors in the company.

I’ve shared the link for the investing-cons of Singapore Airlines earlier, but here’s the link again.

If you like what you've seen, you can get even more investing insights and analyses from The Motley Fool's weekly investing newsletter Take Stock Singapore. It's FREE, so do check it out here.

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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 contributor Lawrence Nga doesn’t own shares in any companies mentioned.