How is SATS Ltd Spreading its Wings for the Future?

SATS Ltd (SGX: S58) is the main ground-handling and in-flight catering service provider at Singapore Changi Airport. Besides its operations in Singapore, SATS has also established a network in Asia through various joint ventures.

The company released its annual report for the full year ended 31 March 2017 (FY2016-17) a few months ago. In it, the firm’s Chairman and its Chief Executive Officer spoke about the growth strategies in the years ahead.

Here, we will take a look some of the plans that were highlighted.

In line with the higher demand for safe and high-quality food, the company is investing S$18 million to expand SATS Inflight Catering Centre 2 at Changi Airport with a new highly automated production line. The extended facility should be completed by the second half of this year and will serve the new Changi Airport Terminal 4 that is opening at the end of next month.

SATS also became the first international cargo handler to be awarded a cargo handling licence in Dammam, Saudi Arabia, during the year. Furthermore, its first cargo investment in the Middle East last year, Oman Air SATS Cargo, secured new customers for the year. These developments bode well to enhance connectivity for its cargo customers in the region.

Due to higher internet penetration and disposable incomes, Asia Pacific is set to be the largest and fastest growing retail eCommerce market worldwide with sales projected to top US$2.3 trillion by 2019. On that front, the firm finished construction of SATS eCommerce AirHub, a new highly automated mailbag sortation facility at Changi Airport. The automation will help to reduce mail processing time by 50%. Right now, SATS is the only ground handler in the region to operate such an automated airside facility.

SATS is betting on the rising middle class in Asia to grow its business. Investors should keep a close eye on the financial figures of the firm in the years ahead to see if the plans pan out well.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of SATS Ltd. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.