SIA Engineering slashes shareholders' dividends

DPS was cut to 4 Singapore cents in 1H16.

Despite SIA Engineering's strong net cash position of $508m, 1H17 interim distribution per unit was cut to 4 Singapore cents from 6 cents in 1H16. CIMB said it has forecast a total DPS for FY17 of 15 Singapore cents.

"We believe the DPS cut could be due to the company preserving cash for capex on new product and technology upgrades, amid challenging near-term maintenance, repair and overhaul outlook," the brokerage firm noted.

The firm noted that given SIA Engineering's $178m extraordinary item derived from the divestment of HAESL, its total DPS for the whole year should be up 24 Singapore cents.

Meanwhile, CIMB reported that cash dividend received from JVs and associates was down 38% yoy to S$23.3m in1H17.

This came as its revenue dipped 2.5% qoq in 2Q17, possibly due to weaker fleet management volume possible loss of customers or market share. This happened although Changi Airport data showed +2.5% qoq flights handled, SIE's revenue dipped 2.5% qoq in 2Q17, possibly due to weaker fleet management volume (possible loss of customers or market share).

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