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What Investors Should Know About SATS Ltd’s Past And Future

SATS Ltd (SGX: S58) is a company with two business segments, namely, Food Solutions and Gateway Services.

The former covers airline catering, food distribution, and industrial catering while the latter handles airport terminal and cruise terminal services.

Let’s look at SATS from two perspectives: The past and the future.

The past

Over its last 10 fiscal years, SATS’s profits have grown from S$188.6 million in fiscal 2006 (fiscal year ended 31 March 2006) to S$220.6 million in fiscal 2016. While that represents annual growth of a mere 1.6%, the company’s profits have actually been pretty stable, with the lowest in that 10-year time frame being the S$146.8 million seen in fiscal 2009.

Moreover, SATS’s revenue has managed to grow by 6.2% annually from S$932 million in fiscal 2006 to S$1.70 billion in fiscal 2016.  The company’s steady profits have also enabled it to dish out an annual dividend consistently in its last 10 fiscal years. Those payouts have also climbed from S$0.10 per share in fiscal 2006 to S$0.15 in fiscal 2016.

Given the above, SATS’s business in the past 10 years can be characterised as stable and sustainable.

The future

Recently, SATS has been actively seeking growth opportunities on various fronts.

For instance, the company announced last August that it will be taking over the airmail consignment operations of Singapore Post Limited (SGX: S08). Doing so may give SATS exposure to Asia’s growing field of e-Commerce.

As another instance, SATS had bought a 49% stake in Brahim’s Airline Catering Holdings in February 2016 to enter Malaysia’s airline catering industry.

There were more partnerships that SATS had worked on in fiscal 2016 in a bid to grow its business.

But, it’s important to note that these investments and new initiatives might not work out as planned. As SATS is venturing into new businesses and working with new partners, it’s likely that not all of them will deliver the expected returns. Investors might want to keep an eye on SATS’s progress in the future.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.