4 Stocks This Week (SIA $15B Fundraising) [30 April 2021] SIA; SIA EC; SATS; ST Engineering

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In his Labour Day speech on 1 May 2021, Prime Minister Lee Hsien Loong put great emphasis on the role air transport has played to put Singapore as a global and regional hub.

Underscoring Singapore's resolve for SIA, PM Lee said: “The government is decided that SIA will see through this crisis. SIA has always flown Singapore's flag high around the globe, and made us proud. We'll spare no effort to enable it to do this again.”

As Singapore's national carrier, Singapore Airlines (SIA) has supported Singapore's combat against COVID-19, including flying in essential supplies, mounting evacuation flights to create Singaporeans' home and having its cabin crew function as care ambassadors and safe distancing ambassadors.

Of course, its operations are also severely impacted as its air crafts happen to be grounded on the back of lockdowns in Singapore and the majority of countries around the world.

In this instalment of 4 Stocks This Week we look more closely at Singapore's aviation sector.


As the national carrier, SIA has been severely hit through the impact of COVID-19 on border control, air travel and tourism. On 23 March, SIA announced it has cut 96% of its capacity, inducing the grounding of 138 out of 147 SIA and SilkAir aircraft, and 47 of 49 Scoot aircraft.

On Thursday (30 April 2021), SIA held its virtual Extraordinary General Meeting (EGM), where 99.79% of SIA's shareholders approved a $15 billion fundraising exercise. To make sure this $15 billion lifeline lasts, SIA has also embarked on cost-cutting measures, together with a cut in fees for management and company directors are also agreeing to a decline in their fees, while you will see salary cuts and compulsory no-pay leave for employees.

Since the start of the year, SIA has plunged to all-time lows of $5.35. It is currently trading at $6.11, which is 33% lower than at the start of the year.

SIA Engineering (SGX: S59)

A 78%-owned subsidiary of SIA, SIA Engineering (SIAEC) operations can also be expected to be hindered through the COVID-19 pandemic. The company is in the business of 1) engine & engine component repair & overhaul, 2) component repair & overhaul, manufacturing & engineering services, 3) fleet management services, 4) line maintenance services and 5) airframe maintenance services.

Similar to SIA, SIAEC's management and board of directors also have cut their pay and fees between 20% and 25%. Other lower management team might find their pay cut up to 5% and 15%. The audience will also cut non-essential operating costs, including compulsory no-pay leave.

Trading at $1.87, SIAEC's share price has fallen nearly 34% since the beginning of the year.


Another company which derives the bulk of its revenue from the air-travel sector, SATS has warned shareholders of a substantial financial hit from the coronavirus outbreak. It has also implemented pay cuts for its senior and middle control over between 12% and 5%.

In 2021, SATS’ share price has dipped close to 50%, from $5.06 at the start of the year to $2.58 in late March. It has since witness a recovery to trade at $3.28 today, which is still a 35% dip in the year-to-date.

ST Engineering (SGX: S63)

With about 44% of its revenue based on the Aerospace segment, ST Engineering may also be heavily impacted by the air travel turn off due to COVID-19's. In addition, its other segments will even see a varying degree of strain.

ST Engineering's CEO will reduce his salary by 10%, while senior management team will require a pay cut which is between 5% and 10%.

ST Engineering's share price has organized more firmly than the other companies on this list, likely because of its diversification across multiple sectors. Its stock price has dipped 13% since the oncoming of 2021 to $3.43.

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