Making Sense of SATS Ltd.

We Singaporeans are quite a global bunch, often travelling to nearby countries for short getaways during long holidays.

If you are one of them, then you would have also utilised the services of SATS Limited (SGX: S58).

That being said, it would be an understatement if you believed SATS Ltd is just involved in airport services. In fact, other than ground handling facilities and in-flight food and services, SATS is also involved in food products & distribution and catering.

Other than the airline industry, it is also exposed to the healthcare and hospitality sectors. By having interests across a range of services and sectors, it should give the company more stability.

Here are four common financial measures that could help determine if SATS is interesting at current prices.

  1. Price to Earnings (P/E): SATS is currently trading at $3.99 a share. Half year earnings were S$0.099. If we assume earnings are repeated for the rest of the year, it would mean full-year earnings of $0.198. Based on this, the P/E ratio is 20.15. This looks like a little on the high side. But if SATS has reasonable growth prospects with the new Terminal 4 and 5, a higher P/E could be acceptable.
  2. Price to Book (P/B): The company has a Net Asset Value of $1.30. At this price it has a P/B ratio of 3.06. This is on the high side.
  3. Debt to Equity: SATS has about S$108.6 million in debt on its balance sheet. It has equity of S$1526.4 million. This equates to a debt-to-equity ratio of 0.07, which is very conservative.
  4. Dividend Yield: Last year the company paid a dividend of $0.14, resulting in a dividend yield of 3.5%. After the first half the company declared a $0.05 dividend which is similar to last year. This is a fairly decent.

Looking SATS from a value investor’s perspective, it seems that the company is neither a screaming value nor overly expensive.

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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 Esjay does not own shares in SATS Ltd.