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An Investor’s Quick Overview Of How SATS Ltd Generates Its Income

Source: SATS

SATS Ltd (SGX: S58) is a company providing food solutions and gateway services solutions. The Food Solutions covers airline catering, food distribution and industrial catering, whereas Gateway Solutions is involved in ground handling services of passengers, flights and cargo.

In this article, we will try to understand one aspect of the company — how does it make its money.

Here, we will look at it from three perspectives, namely, by business, by industry and by geography.

Source: SATS Ltd’s 2018 Annual Report

As a quick introduction, Food Solutions includes revenue from inflight catering, institutional catering, hospitality services and airline linen and laundry services, among other things. On the other hand, Gateway Services includes revenue from airport and cruise terminal services, including ground and cargo handling, passenger and security services, baggage handling, apron services and cargo logistics services.

Overall, we can see that SATS’ revenue was quite reasonably diversified between two business segments, with Food Solutions accounting for 54.9% of its 2018 revenue whilst Gateway Services accounting for the rest.

One thing to note here is that SATS has a significant portion of its income concentrated in the aviation industry, accounting for 86.3% of total revenue by industry. Moreover, it is highly concentrated in Singapore (accounting for 82.5% of its revenue by geography). As such, investors must be comfortable of such risks before investing in the company.

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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. Motley Fool has a recommendation for SATS Ltd.