The Motley Fool

5 Things for Singapore Investors to Like About SATS Ltd Now

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

SATS recently announced its third-quarter results for the financial year ending 31 March 2019. Here are five things investors will like about its latest result.

The results

Here’s a condensed income statement from SATS for the latest earnings update:

Source: SATS’s Result Presentation

Firstly, revenue was up across the board. Food solutions grew its revenue 5.0% year on year to S$252.4 million, while gateway services grew its revenue by 6.2% year on year to $211.3 million.

Secondly, SATS’s associates and joint venture’s profit after tax contribution jumped by 51.1% to S$20.7 million, driven by stronger business performance in its associates and a one-off gain on disposal.

Thirdly, year-to-date free cash flow came in at S$119.2 million, up from S$74.8 million in the same period last year, driven mainly by higher operating cash flow.

Next, SATS’s balance sheet remain strong, with cash and short-term deposits of S$270.7 million, while its debt stood at S$96.8 million as of 31 December 2018.

Last but not least, the company’s outlook remained positive:

“Despite the slowdown in the global economy, increasing volumes in the aviation industry and strong demand for convenient food in Asian cities are creating growth opportunities for SATS. We are well-positioned to extend our market leadership in Asia Pacific, especially in the large, dynamic markets.

China is a key market for us for scale and connectivity, and we have invested in ground and cargo handling, and catering operations at the new Daxing International Airport in Beijing. Furthermore, we are building new central kitchens in China to supply fast casual restaurant chains in key cities.

At the same time, our new ground and cargo handling ventures in India and Malaysia are already growing profitably.”

Click here now for your FREE subscription to Take Stock Singapore, The Motley Fool’s free investing newsletter. Written by David Kuo, Take Stock Singapore tells you exactly what’s happening in today’s markets, and shows how you can GROW your wealth in the years ahead.  

The Motley Fool’s purpose is to help the world invest, better. Like us on Facebook  to keep up-to-date with our latest news and articles.

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. The Motley Fool Singapore has a recommendation for SATS Ltd.