The Motley Fool

2 Singapore Blue Chips That Recently Reported Growth

We are now in the busiest part of earnings season.

Many companies have reported their results in the past few weeks, and some of the news has been quite good. Today, we’re looking at two companies that delivered growth in their latest results.

First up is SATS Ltd (SGX: S58), 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.

For the quarter ended 31 December 2018, SATS reported that revenue was up by 5.5% year on year to S$464.0 million. Operating profit was down marginally by 0.6% to S$65.3 million, mainly due to higher expenditures. Associates and joint venture’s profit after tax contribution jumped by 51.1% to S$20.7 million, driven by stronger performance in gateway services and offset partially by weaker performance in food solutions. Similarly, net profit attributable to shareholders for the quarter grew by 3.5% to S$68.9 million, driven by higher revenue and stronger contribution from associates and joint ventures.

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 and driven mainly by higher operating cash flow. As of 31 December 2018, SATS’s cash and short-term deposits stood at S$270.7 million, while its debt stood at S$96.8 million.

The company also provided the following outlook guidance:

“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.

We continue to enhance the sustainability of our business by digitalising our operations, developing our people, and building new capabilities while seeking acquisitions that can help us accelerate the implementation of our strategy to feed and connect Asia.”

Thai Beverage Public Company Limited (SGX: Y92) — operating in four different segments, namely spirits, beer, food, and non-alcoholic beverages — also reported growth in its recent quarter.

For the quarter ended 31 December 2018, Thai Beverage reported that revenue was up 59.7% year on year to THB 72.6 billion. Similarly, EBITDA (earnings before interest, tax, depreciation, and amortization) jumped by 119.6% as compared to last year to THB 12.3 billion. Consequently, net profit attributable to shareholders surged by 150.7% year on year to THB 7.4 billion.

Excluding one-off items, net profit attributable to shareholders would have improved by 36.9% instead. The strong performance was driven by higher profits in the spirits and food segments.  As of 31 December 2018, the Group had cash and cash equivalents of THB 22.4 billion and total borrowings of THB 217.4 billion. The combination gives it a net debt position of THB 195.0 billion.

Thai Beverage commented on the general economy outlook:

“The Thai economy continued to expand in 1Q FY2019, driven by the tourism sector and a rise in private consumption. The country’s exports, however, grew at a slower pace. Stability wise, the rate of headline inflation decelerated, following a decline in retail petroleum prices.

The domestic beverage market showed signs of recovery as private consumption picked up. This was partly due to an increase in farmers’ income levels and the government’s welfare cards policy that underpinned consumer purchasing power. Moving forward, the campaigns ahead of the coming election in March 2019 are also expected to further stimulate the economy.”

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.