SIAEC share price plunged into hell

It seems that hell has a special place for SIAEC share price. The coronavirus outbreak imploded out of nowhere to cause the entire aviation industry to come to a grinding halt, leading global airlines to ground their fleets. The latest government order to close down workplaces (except for essential services) in Singapore will further roil SIAEC share price to no end.

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SIAEC share price

Year-to-date, SIAEC share price plunged by a staggering 44%. This made SIAEC share price one of the biggest falling stars among the SGX shares. Against this backdrop, investors must be having plenty of sleepless nights and wonder if SIAEC share price will recover from this nightmarish run. The coming full-year financial result will be a litmus test for SIAEC share price as the MRO stalwart navigates through this dark chapter of aviation.

The grounding of aircraft among global airlines will hurt SIAEC’s MRO business and dented SIAEC share price. From a technical point of view, when an aircraft is grounded, a large portion of the maintenance works which are based on interval of flight hours or flight cycles need not be carried out. Of course, there are calendar-based maintenance works but they are mainly for metallic structures that are prone to corrosion. However, new aircraft like B787 and A350 are composite planes that do not corrode easily. Thus, the grounding of aircraft will drastically impact the volume of business for SIAEC.

The situation is indeed grim for SIAEC share price. At current level, this counter is trading at similar level last seen in 2009, which was the peak of the Great Financial Crisis. The difference is that SIAEC share price has yet to hit the bottom under the current climate and will likely to continue rolling off the hill in the coming months.

The problem with SIAEC share price was that most investors thought that this counter had bottomed out in 2019 amid wild speculations that parent company, SIA, could be mounting a takeover. But the rumour remained as rumour. It turns out to be a value trap after all. Under current situation, SIA is desperately conserving cash flow at the moment and all talks of splashing out a multi-million cash offer to privatize SIAEC must be off the table.

Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. Furthermore, I am not vested and have never invested in SIAEC before. Whether SIAEC share price will surge or collapse has no impact on me. Thus, this article is not meant to induce readers to make any form of investment decisions.

SIAEC share price in harsh winter

Needless to say, most aviation stocks suffered short selling attacks due to the severe fallout from the coronavirus. SIAEC share price is no exception. Previously, there were very little short selling activities on this counter, especially from December 2019 to January 2020 period. But in February onwards, the short selling volumes surged from 8,000 shares to a peak of 80,000 shares in last week of March.

Based on data collated in SGX, the shorting trend against SIAEC share price shows [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: April 6, 2020 — 4:24 am

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