10 Things to Know About SIA Engineering Company Ltd’s Latest Earnings

SIA Engineering Company Ltd (SGX: S59) is an aircraft maintenance, repair and overhaul (MRO) firm that is primarily owned by our flag carrier, Singapore Airlines Ltd (SGX: C6L).

Last Friday, the MRO firm released its financial results for the second quarter ended 30 September 2017. The reporting period was from 1 July 2017 to 30 September 2017.

Here are 10 things investors should know from the earnings announcement:

1. Revenue for the quarter rose 3.7% year-on-year to S$274.7 million, due to growth in revenue from airframe overhaul, component overhaul, and line maintenance. This was partially offset by the decrease in fleet management revenue.

2. However, due to an increase in expenditure, operating profit fell 20.4% to S$19.5 million.

3. The share of profits of associated and joint venture companies, net of tax, grew 33.1% to S$22.9 million.

4. For the quarter, net profit increased 7.3% to S$38.1 million. Contributions from associated and joint venture companies helped to prop up the bottom line.

5. Consequently, earnings per share went up by 7.3% to 3.39 Singapore cents.

6. The balance sheet slightly weakened for the latest quarter, even though the firm is still in a net cash position. As of 30 September 2017, SIA Engineering had short-term deposits and a cash balance of S$467.2 million, against total debt of S$26.8 million. This translates to a net cash position of S$440.4 million. In comparison, as of 31 March 2017, it had a net cash position of S$575.8 million.

7. SIA Engineering did not produce any free cash flow for the quarter, just like last year.

8. The MRO company declared an interim dividend of 4.0 cents per share, unchanged from a year ago.

9. For the financial year ending 31 March 2018, the MRO firm is expected to book a gain of around S$14.3 million for the sale of its 100% share in Asian Compressor Technology Services Company Limited to MB Aerospace Newton Abbot Limited.

10. As for the outlook, SIA Engineering said, “The MRO industry is faced with the challenges of new-generation aircraft and engines that require less frequent maintenance and lighter work content. There continues to be intense regional competition. Nonetheless, the significant increase in aircraft fleet will result in growth for the MRO industry. The Company continues to invest in new technologies and pursue initiatives to enhance productivity and manage its costs. We remain focused on building capabilities for new-generation aircraft and engines and aligning our portfolio of joint ventures to tap new opportunities in the changing business environment. The above initiatives will enhance our capability for new-generation aircraft and engines and position us for sustainable long-term growth”.

Shares of SIA Engineering Company Ltd are selling at S$3.29 apiece currently. This translates to a trailing price-to-earnings ratio of 21 and a trailing dividend yield of 4%.

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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 Sudhan P doesn’t own shares in any companies mentioned.