What Investors Need to Know About SATS Ltd’s Latest Earnings

Yesterday, SATS Ltd (SGX: S58) announced its financial results for the third quarter and nine months ended 31 December 2017. Here are 10 things investors should know from the earnings announcement:

1. Revenue inched down 0.2% year-on-year to S$439.8 million. For the nine-month period, revenue slipped 0.2% to S$1.30 billion.

2. SATS’ revenue decline for the quarter was mainly due to the fall in revenue from the Food Solutions business. Revenue from Gateway Services increased 2.6% despite the deconsolidation of SATS HK Limited which was divested in July last year. Excluding the impact of the deconsolidation, the Gateway Services’ revenue would have risen 9%.

3. Share of results of associates and joint-ventures (net of tax) rose 7.9% to S$13.7 million for the quarter while for the nine months, it soared 29.7% to S$47.2 million.

4. Net profit for the quarter improved 2.3% to S$66.6 million. For the nine-month period, it increased 2.5% to S$196.1 million.

5. Quarterly net profit margin rose from 14.8% to 15.1% . For the nine-month period, it went up from 14.7% to 15.1%.

6. Underlying net profit slipped 4.6% to S$62.1 million, but for the nine months, it increased 1% to S$184.6 million. The underlying net profit excludes any one-off items.

7. Diluted earnings per share (EPS) for the reporting quarter was 5.9 cents, up from 5.8 cents a year ago. For the nine-month period, diluted EPS came in at 17.4 cents versus last year’s 17.1 cents.

8. As at 31 December 2017, SATS had S$426.6 million in cash and equivalents, and S$102.7 million in total borrowings. This gives a net cash position of S$323.9 million. The balance sheet slightly improved over the year. Exactly one year prior, the firm had S$424.8 million in cash balance and S$107.6 million in total debt, which translates to S$317.2 million in net cash.

9. Operating cash flow for the quarter was S$55.8 million, down from S$68.1 million one year back. With capital expenditure increasing from S$18.6 million to S$27.3 million, SATS’ free cash flow fell from S$49.5 million to S$28.5 million. For the nine months, free cash flow declined from S$117.6 million to S$74.8 million.

10. As for its outlook, SATS said the following:

“SATS’ performance remains resilient despite a challenging operating environment. Changi Airport’s growth in passenger and cargo traffic will present opportunities for the company to strengthen our operations in Singapore with greater efficiency and innovative products and services.

We will continue to broaden and deepen our presence in overseas markets to boost overseas contributions to our business and draw on scale efficiencies.”

The company’s ended yesterday at S$5.25, giving it a trailing price-to-earnings ratio of 22.5, and a trailing dividend yield of 3.2%.

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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.