SIA Engineering Company Ltd Is Near A 52-Week Low Now: Is It Cheap?

SIA Engineering Company Ltd (SGX: S59) provides aircraft maintenance, repair, and overhaul (MRO) services to over 80 international airlines around the world.

Over the last 12 months, the company’s stock price has fallen by 9% to S$3.40 currently. That’s actually near a 52-week low of S$3.35. But, is SIA Engineering actually cheap?

There’s no easy answer since there are many ways to look at a company’s valuation. But, we can still get some insight by comparing SIA Engineering’s current valuations with the market’s.

The three valuation metrics I will focus on are the price-to-book (PB) ratio, price-to-earnings (PE) ratio, and dividend yield. I will be using the SPDR STI ETF (SGX: ES3) as a proxy for the market; the SPDR STI ETF is an exchange-traded fund that tracks the fundamentals of Singapore’s stock market benchmark, the Straits Times Index (SGX: ^STI).

SIA Engineering currently has a PB ratio of 2.4, which is twice the SPDR STI ETF’s PB ratio of 1.2. So, the company is clearly more expensive than the market, based on the PB ratio.

It is a similar story with the PE ratio. SIA Engineering’s PE ratio of 22.4 is just over twice the PE ratio of 11.1 carried by the SPDR STI ETF.

Lastly, we have the dividend yield. This is where SIA Engineering is better than the market. The aircraft MRO services provider has a yield of 3.8%, which is higher than the market’s yield of 3.1%. (The higher the yield is, the lower a stock’s valued.)

To sum it all up, we can argue that SIA Engineering is priced at a premium to the market currently, given its high PB and PE ratios. But, some income investors may still find the company’s current dividend yield attractive, since it is higher than the market.

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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.