SIA Engine

SIA Engine: The stock is testing its 2010 high, although still 34c / 7% away from the 2007 peak. While some consolidation can be expected, market watchers are tipping the stock as a possible candidate for privatization by SIA, which owns 79%. Some market watchers believe it makes more sense for SIA to do so with the proceeds from exiting Virgin Atlantic than to distribute the “accounting” profit to shareholders, which the most popular bet currently. (Some investors expect SIA to distribute its 870m SIA Eng shares in specie to shareholders, which would naturally be negative for the latter.) E.g at $4.62, the co would be valued at $5.1b (19x trailing PE ), ie the remaining 231.72m shares not owned by SIA would be worth $1.1b. SIA Eng sits on $431.6m cash and generates strong positive cash flow and the yield it is offering investors now is 4.8%.