An investment thesis full of queries and questions

I refer to the post made by Eight percent per annum here.


He made a investment thesis about SIA Engineering which to me, is full of unanswered questions. 

Here are excerpts from his post:

"Aircraft maintenance is a flow business that thrives on more air travel, more aircrafts in the skies and more efficient safety checks. SIAEC is one of the few key players in Asia in the space alongside ST Engineering and HAECO, the maintenance arm for Cathay Pacific and has benefitted from this trend. The maintenance, repair and overhaul (MRO) business as it is formally called has high barriers to entry as it requires a certification process for each and every airline as well as a steady track record in order to win customers. In fact, some airlines view this as fundamental that it doesn't outsource this entirely but conduct some MRO operations in-house. Hence SIAEC had benefited mainly from LCCs in recent years since LCCs do not have the capacity to have full fledge MRO operations in-house. 

SIAEC is a play on the rise of global tourism alongside the influx of Low Cost Carriers or LCCs operating in Asia. It also benefits from more full fledge airlines outsourcing maintenance to established third parties like itself. As a leader in the industry, it enjoys a strong track record, economies of scale, an accumulation of knowhow and efficient processes and a strong branding via its relationship with Singapore being an aerospace hub and its parent SIA. It has generated strong free cashflow in the past and is likely to grow its earnings with the opening of T4 and T5."

-Air Asia and Lion Air are the biggest LCCs growing in the region, they don't outsource to SIAEC

-Which are the full service airlines that outsource to SIAEC?

"However more national carriers are also choosing to outsource maintenance to players like SIA Engineering as they can they reduce their asset footprint, sell hangars and facilities. It is also expensive for airlines to maintain a competent MRO workforce. Hence established players like SIAEC that have know-how and once they get economies of scale, can do MROs much cheaper than established airlines.

With Changi Airport embarking on an ever-expansion to Terminal Four or T4 in 2017 and ten years later to T5, SIAEC will also stand to gain more business simply by being the dominant player in Singapore. Airlines would definitely love to stopover in Singapore, do a quick overhaul and move on. This has always been our advantage. We are efficient, can turn around fast, has the reputation to get the job done well and all these in turn help to suck in more traffic and strengthen our brand name."

- Which are the national carries that are outsourcing their maintenance? 

- Dominant player in Singapore is not meaningful in Aerospace MRO, aircraft can fly to other countries and components can be shipped around the world.