SIA Engineering Company shares rocked by JP Morgan’s sale

On 4 October, SIA Engineering Company shares tumbled to 6-year low following news of JP Morgan’ sale. Share price fell in the early morning of trading to $3.15 before recovering to $3.20 level. In my opinion, the correction is long overdue as the business outlook for the MRO giant has considerably dimmed in recent years with the entry-into-service of new aircraft requiring much less maintenance works.

Financial results for 1Q2017/18 revealed that profit declined 82% to $36.2 million. The huge decline was because of the absence of divestment gain in last year (SIA Engineering divested 10% stake in Hong Kong Aero Engine Services Ltd (“HAESL”) to Rolls-Royce Overseas Holdings Limited (“RROH”) and Hong Kong Aircraft Engineering Company Limited (“HAECO”)).

However, even after excluding the impact of the divestment in the quarter ended 30 June 2016, profit for the current quarter of $36.2 million was $1.8 million or 4.7% lower. Revenue also remained flat, at $272.8 million. Although the results were not exactly that disappointing, they seemed to suggest that SIA Engineering business fundamentals might have peaked.

SIA Engineering

To be fair to the management, SIA Engineering had tried to engineer growth in view of the challenging operating environment. Last year, SIA Engineering began to [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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Updated: March 7, 2019 — 1:37 am

4 Comments

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  1. Perhaps it’s because SIAEC was dropped from the STI index. Some banks and funds cannot hold stocks which are not index stocks. So when dropped from index they have to sell regardless of performance of the stock.

  2. Hi Dividend2freedom,

    You may be right. Thanks for pointing this out. Didn’t know SIAEC was dropped from the STI index. Interesting point.

    Regards,
    Gerald
    https://www.sgwealthbuilder.com

  3. Actually, TEMASEK HOLDINGS WILL WELCOME A MERGER BETWEEN SIA ENGINEERING AND ST AEROSPACE THAT WILL CREATE A SINGAPORE-OWNED GLOBAL MRO POWERHOUSE.

    While highly speculative at this juncture, we believe that a merger between SIA Engineering and ST Engineering

    I am a Market Analyst of Singapore Stock Market ,Kindly Ping me When you Published a new post.

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