21-09-2010, 09:29 PM
Hi yeokiwi,
Thanks for the very detailed and insightful information, coupled with analysis of the JV companies. I"ve come up with something similar in MS Excel format as well and will post it up in Part 3 of my Analysis of Purchase. In the meantime, let me comment on what you have posted....
You said apart from Philippines, SIAEC is mostly doing line maintenance. However, I think you should include Ireland and Taiwan as well in the list as the JV/Assoc Companies there are doing repair and overhaul of engine cases, as well as Repair and overhaul of PW4000 high-pressure compressor stators respectively. These will constitute MRO services.
In addition to these, and which was not in the Annual Report's main financial section, was the establishment of a facility in Bahrain (MOU with Gulf Technics) to perform MRO for the Middle Eastern market. However, since it is just an MOU, it will need time for a formal contract to be signed. So SIAEC is also trying to expand their MRO market share and there are ample opportunities in Middle East for them to expand into.
You are correct about the JV in India - I think it did not come to fruition but then again, business being business, such things do occur from time to time. The important thing is that the Company continues to seek out growth avenues and this is evident from the numbers.
SIAEC is also exploring providing line maintenance services for Vietnam's Tan Son Nhat Airport in Ho Chi Minh City (HCMC). An Agreement was signed in Feb 2009 but thus far there is no announcement on this, so I guess we will have to treat it as being in "limbo" for now. Since SIAEC has a good track record of aggressively pursuing and concluding JV agreements and setting up associated companies, I continue to have faith that the Company will be able to grow its JV/Assoc base so as to garner more share of profits, as well as higher cash flows from Investing Activities in terms of dividends.
Note too that the latest Assoc Company formed (49% stake) was with internationally renowned Safran Group, and SIAEC will provide avionics maintenance, repair and overhaul services which is part of MRO. This JV was just concluded in June 2009.
I also view SIAEC's move to have a stake in P&W's engine developments for the C-Series aircraft engine program (3%) and the MRJ aircraft engine program (1%) as being an innovative way to partake in the share of profits arising from this new business segment.
To be honest, I was merely comparing HAECO and SIAEC based on numbers and financials, as per my previous post. Definitely, HAECO has potential to grow due to it being located in Hong Kong and its proximity to China (and China is booming). However, if you examine metrics such as ROE, Net Margin and also % of capex, the numbers from SIAEC are better. So I will not totally agree SIAEC is simply good for cash flows while HAECO is good for growth. Both have a good mix of both cash flows (dividends) and growth, but an investor should choose the company in which he feels more comfortable in to invest.
For me, I chose SIAEC based on the aforementioned reasons.
Cheers!
Thanks for the very detailed and insightful information, coupled with analysis of the JV companies. I"ve come up with something similar in MS Excel format as well and will post it up in Part 3 of my Analysis of Purchase. In the meantime, let me comment on what you have posted....
You said apart from Philippines, SIAEC is mostly doing line maintenance. However, I think you should include Ireland and Taiwan as well in the list as the JV/Assoc Companies there are doing repair and overhaul of engine cases, as well as Repair and overhaul of PW4000 high-pressure compressor stators respectively. These will constitute MRO services.
In addition to these, and which was not in the Annual Report's main financial section, was the establishment of a facility in Bahrain (MOU with Gulf Technics) to perform MRO for the Middle Eastern market. However, since it is just an MOU, it will need time for a formal contract to be signed. So SIAEC is also trying to expand their MRO market share and there are ample opportunities in Middle East for them to expand into.
You are correct about the JV in India - I think it did not come to fruition but then again, business being business, such things do occur from time to time. The important thing is that the Company continues to seek out growth avenues and this is evident from the numbers.
SIAEC is also exploring providing line maintenance services for Vietnam's Tan Son Nhat Airport in Ho Chi Minh City (HCMC). An Agreement was signed in Feb 2009 but thus far there is no announcement on this, so I guess we will have to treat it as being in "limbo" for now. Since SIAEC has a good track record of aggressively pursuing and concluding JV agreements and setting up associated companies, I continue to have faith that the Company will be able to grow its JV/Assoc base so as to garner more share of profits, as well as higher cash flows from Investing Activities in terms of dividends.
Note too that the latest Assoc Company formed (49% stake) was with internationally renowned Safran Group, and SIAEC will provide avionics maintenance, repair and overhaul services which is part of MRO. This JV was just concluded in June 2009.
I also view SIAEC's move to have a stake in P&W's engine developments for the C-Series aircraft engine program (3%) and the MRJ aircraft engine program (1%) as being an innovative way to partake in the share of profits arising from this new business segment.
To be honest, I was merely comparing HAECO and SIAEC based on numbers and financials, as per my previous post. Definitely, HAECO has potential to grow due to it being located in Hong Kong and its proximity to China (and China is booming). However, if you examine metrics such as ROE, Net Margin and also % of capex, the numbers from SIAEC are better. So I will not totally agree SIAEC is simply good for cash flows while HAECO is good for growth. Both have a good mix of both cash flows (dividends) and growth, but an investor should choose the company in which he feels more comfortable in to invest.
For me, I chose SIAEC based on the aforementioned reasons.
Cheers!

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