$SIA (C6L.SG)$ :  Will there be massive gain potential for S...

$SIA (C6L.SG)$ :  Will there be massive gain potential for SIA’s shares ? Let’s analyse ! ( It's a long write-up and may take you up to 5 minutes to read. )

Yes, SIA is giving reasonably good dividends of more than 7% annually after Covid-19. Nevertheless, it is also an airline industry stocks that have the potential for growth if well managed.

Amazingly, SIA is quite innovative. Holding 25.1% stake of Air India, expanding its network into China, Australia, Europe, US and across the globe, etc.

Together with STPB, organizing events like live concert, Illumi, F1, year-end Christmas lighting, drone display, and not forgetting the latest attraction at Resort World Santosa (Harry Potter Visions of Magic), etc, to attract tourists globally.

When it comes to investing in a company, there are two main important factors that we may like to consider.
1. Constant increase in the profit
If the growth of their expenses is faster than the growth of their revenue, then that is bad, as this shows the inefficiency of the company’s management in their financial sector. Anyway, SIA has all the high intellectual people up there and is managing quite well so far, except expenditures are slightly up in its recent report, probably due to high oil prices and staff salaries. Anyway, there's nothing to worry about SIA as she is cash rich now.
2. How does the company spend their income
Do they give dividends, share buybacks, or invest back into the company for growth?
These are the 2 main factors that we may wish to consider when it comes to investing in any company.

Basically, SIA is divided into three main groups. The first is Singapore Airlines itself, followed by its budget airline, Scoot, and finally its Engineering Company. However, the focus is, of course, the main company, Singapore Airline, which contributes the bulk of its revenue.

Sadly, there could be a possibility of a slowdown in the travel divine as forecast by most analysts.

After the Covid-19, air tickets seem to be very expensive, and yet people are still paying for it.

Looks like it's compulsory. If you want to travel, you need to pay for your own air ticket. Thus, resulting in record profits for SIA.

As for SIA, it is more of a safety concern, and it's excellent service provided. Making you feel like VIPs. Well treated.

Two worrying factors. Fuel costs and cancellation of flights are a serious threat for all airlines.

Airline companies need to hedge their fuel prices. However, it's important that they balance their hedging in the derivative market and also ensure that they do not over hedge their oil price so that in the event when the oil price drops, they can still benefit from the lower fuel prices.

On the bright side, the company is making the right move by using the profits earned from this post pandemic travel height to fully redeem its Mandatory Convertible Bonds issued during the COVID time.

The MCB redemption greatly reduces the company’s liabilities. In return, shareholders may enjoy higher dividends even though the expenses have increased slightly.

I think if the increase in dividends is less than the MCB liabilities, that’s fine for SIA, and for me, I hope SIA has the same thoughts as I do. Just my wild prediction only, as I am not the CEO of SIA.

I think the Big Boys are still very fearful of the 2 fear factors, which is why the share price doesn't seem to be appreciated massively even though SIA has produced very good results. That's why the dividend is still priced at a very attractive rate of above 7%.

Of course, if the tourism figure rebound significantly in the coming months or years ahead, investors who buy at this current price will be handsomely rewarded.

Do watch out for next week and next month’s FOMC meeting that may elevate the US stock market further to the next new height as another 25 basis-point cut each time is on the card.

Hopefully, Dow Jones, STI, and SIA will follow suit. I am also very hopeful for good SIA results and dividends that will be announced on Nov 8.

Again, this is just my wild guess, so please do not jump in blindly, as I can be wrong.

Good luck to everybody. Hopefully, we can sing Jingle Bell together.