SATS Ltd (SGX: S58) is a company providing food solutions and gateway services solutions. The Food Solutions covers airline catering, food distribution, industrial catering, whereas Gateway Solutions is involved in ground handling services of passengers, flights and cargo.
In this article, we will try to understand how SATS makes its money. Here, we will look at it from three perspectives — by business, by industry, and by geography.
Source: SATS’ 2019 Annual Report
As a quick introduction, Food Solutions includes revenue from inflight catering, institutional catering, chilled, frozen and retort food manufacturing, hospitality services and airline linen and laundry services.
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 the two business segments, with Food Solutions accounting for 54.1% of its 2019 revenue while 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 85.7% of total revenue by industry. Moreover, it is highly concentrated in Singapore (accounting for 82.4% of its sales by geography).
There are several moving parts for SATS. Thus, I hope that the above breakdown will help investors better understand SATS’ business.
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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.