As an engineer working in the aviation industry for 15 years, I have seen the rise and fall of the sector. Inevitably, when we talk about the aviation industry, investors would likely to draw comparison between the two Singapore titans – SIAEC and ST Engineering. Between the two, SIAEC share price had lost considerably shine in recent years, making it one of the biggest falling stars in SGX mainboard. Will SIAEC share price ever see light at end of tunnel?
Both entities had dominated the local aviation industry for decades and are majority-owned by Temasek Holdings. Nonetheless, the similarities ended here as both companies took on entirely different destinies due to a series of unfortunate events and different business strategies. From the lens of investors, it seems that someone up there has decided to write intrigue scripts for SIAEC share price and ST Engineering share price.
Whilst SIAEC and ST Engineering had ruled the local aviation industry for decades, both are fundamentally very different companies with niche business models. The former is mainly engaged in the regional airlines maintenance and technical services businesses while the latter is engaged in the maintenance and modification businesses, with special focus in the United States MRO market and passenger-to-freighter conversion capabilities.
In this article, I will share my insights on the unfolding narratives for both SIAEC share price and ST Engineering share price. Given a choice, I will pick ST Engineering as a long-term investment based on a few factors which I will reveal in the latter part of the article.
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 or ST Engineering before. Whether SIAEC share price and ST Engineering share price surge or collapse will have no impact on me. Thus, this article is not meant to induce readers to make any form of investment decisions.
SIAEC share price in nightmare form
For SIAEC share price, the challenge is identifying what the management had done right instead of what went so wrong for the company. Like ST Engineering, SIAEC share price should rightfully be in “evergreen” form because the company provides maintenance services for regional airlines. However, SIAEC share price suffered an unexpected disaster following the entry of service of new aircraft models like 787. A350, A320NEO and B737-MAX.
These new aircraft require fewer maintenance checks and longer maintenance task intervals, especially in the first few years of entry into service. Arising from this new trend, the MRO sector in Singapore has seen a decline in business in recent years. This is because about 90 per cent of the local aerospace work is tied to aircraft maintenance and repairs.
To illustrate the dismal business performance that caused SIAEC share price to rupture, the revenue for SIAEC for [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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