What Does SIA Engineering Company Ltd Do and How Does it Make its Money?
It is important to know what a particular does and how it makes its money before investing in it. Investing in a business without such a knowledge is akin to travelling to an unknown territory without a map.
Also known as SIAEC, the firm, as of 1 June 20017, was 77.7% owned by our flag carrier, Singapore Airlines Ltd. (SGX: C6L). SIAEC became listed in 2000 and has three business segments. The table below shows their respective revenue contributions for the financial year ended 31 March 2017 (FY2016/17):
Source: SIAEC’s Annual Report 2016/2017
Revenue from Airframe and Component Services, which made up some 40% of the firm’s total revenue in FY2016/17, was at around S$444 million.
Under this division, the company provides base maintenance of aircraft, and repair, modification and testing services for aircraft components. These components include engines and landing gears. Furthermore, the division provides cabin refurbishment, VIP aircraft modification, aircraft painting and retrofitting of inflight entertainment and avionics systems.
In FY2016/17, Airframe and Component Services division completed a total of 516 maintenance checks, which is an improvement over last year’s figure of 463.
Moving on, the Fleet Management business division covers engineering, maintenance support activities and inventory management of aircraft. As of 31 March 2016, the Division managed a total of 129 aircraft, down from 156 aircraft a year back.
Last but not the least, the Line Maintenance business division, which brought in the bulk of the sales, served an international client base of more than 50 airlines at Singapore Changi Airport during the financial year. This translates to a whopping total of 141,454 flights, an uptick of 2.6% as compared to one year ago.
Behind every ticker symbol lies a living, breathing business. Buying a stock without fundamental knowledge of what the company does and how it makes money can be risky.
Once we know the basics of a company’s revenue streams, we can then delve into other aspects of the firm such as its profitability, strength of its balance sheet, its cash generating abilities, and more.