Friday, 29 November 2013

A Tech Analysis of SIA Engineering


Singapore's position as a global aviation hub will be strengthened with Changi Airport's T4 targeting to open in 2017. Passenger and cargo traffic will continue to grow to new record high. But aviation-related stocks are not equally exciting to celebrate the party. The renowned SIA will continue to be squeezed by yield pressure arising from cut-through price competition, and persistence high jet fuel price. While SIA EC is at a better position to benefit from the growth. Comparing with its parent, SIA EC has a business model that is more like a dividend player, as its consistence dividend payout history shows. 

Technically, the stock looks poised for further downside as its mid Bollinger band has been acting a resistance. Last trading day saw the price close below 200-day EMA. MACD indicator looks poised to move below its centreline. The support is around 4.6 the low in Sep. Even at that price level, the yield is about 4.7%, which is not quite lucrative. But given its unique exposure to aviation MRO market, and its growth prospect, its monopolising power, and its strong balance sheet. It is worth considering to add into a balanced long-term dividend portfolio. But when it comes to blue chips such as SIAEC, one should be more patient, as even if it is a good stock, we don't want to pay too high a price.
 

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