The Motley Fool

SATS Ltd’s Robust Track Record in Growing Its Business

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

One of the things that I like to do when analysing a company is to study its track record. The past is no guarantee of the future, of course. But historical information is the most reliable thing that we can use as our basis to forecast what lies ahead.

Quick overview

And this brings me to the main purpose of this article, which is to have a quick overview of SAT Ltd’s historical business growth. The table below is a snapshot of the company’s important financial metrics from FY2014-15 (financial year ended 31 March 2015) to FY2018-19 (financial year ended 31 March 2019):

Source: SATS Ltd’s 2019 Annual Report

Here are a few points worth noting. First of all, revenue grew from S$1,753.2 million to S$1,828.0 million, up by 4.3% during the period.

Secondly, operating profit grew from S$178.0 million in FY2014-15 to S$247.0 million in FY2018-19, up by 38.8% during the period. This translates to a compound annual growth rate (CAGR) of 8.5%. Similarly, profit after tax grew by 34.4% (or a CAGR of 7.7%) during the period.

Thirdly, its dividend per share (DPS) has grown from 14 cents in FY2014-15 to 19 cents in FY 2018-19, up by 35.7% (or a CAGR of 7.9%) during the period.

Conclusion

In sum, SATS Ltd delivered a solid track record of growth in the last five years, growing revenue, profit, as well as dividends. Notably, profits grew faster mainly due to higher efficiency, which in turn allowed the company to raise dividends substantially over that period.

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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. The Motley Fool Singapore has recommended the shares of SATS Ltd.