5 Useful Things You Should Know About SATs Limited

SATS Ltd  (SGX: S58) is one of the cool companies in Singapore that shares webcasts and/or transcripts of their earnings presentations and conference calls (the link for SATS is here).

The company has two major business segments, namely, Food Solutions and Gateway Services. The former covers airline catering, food distribution, industrial catering, and other services. Meanwhile the latter is involved in ground handling services of passengers, flights, and cargo.

You can read more about SATS in here and here.

SATS reported its fiscal first-quarter earnings for its financial year ending 31 March 2016 (FY15/16) in July. Below are five useful things I learned from listening to its conference call:

  1. In a continuation of the last sequential quarter’s theme, revenue from SATS fell by 4.2% year-on-year in the first-quarter of FY15/16 but its earnings per share rose by 15.4%. This was achieved on the back of a stronger operating margin and higher contribution from its associates and joint ventures.
  2. On the revenue decline, Food Solutions’ 8.2% year-on-year dip in revenue was partially offset by a 2% step up in Gateway Services’ revenue.  From a geographical standpoint, it was Japan that contributed the most to SATS’ lower decline.
  3. For the first-quarter of FY15/16, the number of flights, passengers, and unit services handled in Singapore fell primarily due to the loss of a Jetstar contract. Despite the dour results, there were still good news to share. Chief Executive Officer Alex Hungate said that SATS has regained the Jetstar contract and the impact will be reflected from the next quarter onwards. Hungate also added that the metrics for the quarter would be have been up if not for the loss of Jetstar. This is positive news all round.
  4. Speaking of aviation statistics, Hungate also pointed out that the gross meals and unit meals produced were not impacted from the loss of Jetstar’s contribution this quarter. This was because food is often optional in a low cost carrier. Both metrics – gross meals and unit meals produced – grew by a little under 3% year-on-year.
  5. In the last conference call, Hungate affirmed that SATS is not considering an exit from its Japanese subsidiary, TFK. This appears to be paying off as the subsidiary signed a contract with Delta Air Lines worth $325 million in late June. The results from this deal will start to roll in from September 2015. Hungate is hopeful that this will lead to better performance from Japan in the second half of the year.

Foolish takeaway

To buy and hold a company’s shares for the long-term also means keeping up with developments in the firm.

The access to management teams via webcasts and transcripts gives the Foolish investor a fair chance to judge for themselves whether they would like to be invested alongside those teams. It also helps us put together a more complete thesis around a company and keep up with developments in its industry.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn't own shares in any company mentioned.