SATS

More people are going on cruises?

[Image: IMG_0223.JPG]

That is good news for Sats.

In the third quarter of FY2013-14, the number of flights handled by SATS grew 10.2% and unit services increased by 6.6% year-on-year. Cargo throughput was up 1.9%.

Passengers handled rose 4.8% to 11.25 million, driven by higher low-cost carrier traffic. Gross and unit meals, however, declined 8.0% and 5.7% respectively due mainly to the loss of Qantas’ flights to Europe.

Except for gross and unit meals, all operating metrics grew in the first nine months of FY2013-14.

(Vested)

SINGAPORE – Airport terminal operator SATS said on Tuesday its third-quarter profit slumped 8.7 per cent as it warned of a continued challenging outlook because of rising wages and pressure on airlines’ profitability.

Net profit for the three months ended Dec 31 amounted to S$42.9 million, down from S$47 million in the previous corresponding period, as revenue fell 1.1 per cent to S$465.5 million, largely due to the weakening of the Japanese yen.

During the period, SATS handled 34,920 flights, up 10.2 per cent from the previous corresponding period, and 11.25 million passengers, up 4.8 per cent, the company said.

“The operating landscape for SATS remains challenging in view of the ongoing pressure on airlines’ profitability and rising labour costs. In the near-term, we expect modest growth in passenger traffic at Changi Airport and only marginal growth in air freight at best,” SATS said.

“The group will continue to focus on growing scale in our food business and improving connectivity in our gateway business, while using automation and technology to counter rising manpower costs,” it added.

Q&A on the recent results on 11 Feb

http://edge.media-server.com/m/p/gzsfpdk.../st/retail

Click on Q&A to skip the reporting

SATS today announce an acquisition of 41.65% OF PT CARDIG AERO SERVICES TBK, entering Indonesian market.

Read presentation here

I have just quickly ran through the slides summarize my points as follows:

- 50.1% premium over average price paid
- cost S$118mio on 41.65% equity that valued at S$78.8Mio,
- yielding additional PATMI of S$4.4mio (assuming zero growth and zero exchange fluctuation)
- funding 100% from cash reserve

Additional S$4.4mio is just a small small fraction of the existing PATMI, there will not be much impact expected but is it worth paying 50.1% premium where the return is just merely a 3.7% (4.4 / 118). Unless that it is a price to pay for the passport to enter Indonesian market.

Feel free to correct me if I made mistakes.

RATIONALE FOR THE TRANSACTION
The Transaction is in line with SATS’ strategy to grow its food and gateway businesses by accessing value-creating opportunities.
CAS, a leader in food solutions and gateway services, has presence in 17 airports across Indonesia. It is focussed on the same core business as SATS. This acquisition will also contribute to growing scale in SATS’ food business and will bring new opportunities for connectivity for our mutual customers across our comprehensive suite of gateway offerings.
Indonesia is a priority market for SATS. The country’s topography as an island nation – which makes air travel the most reliable and efficient mode of transportation for both people and cargo across the archipelago – and its fast growing economy and middle class population will continue to drive greater demand for high quality, safe food and travel.
Said Mr Alexander Hungate, President and CEO of SATS: “We already have a strong partnership with CAS through our joint venture, PT Jasa Angkasa Semesta Tbk (PT JAS). With this Transaction, we will work closely with the management of the CAS group to accelerate its growth in the same way that we have with PT JAS over the last 10 years.”
“CAS is an attractive investment opportunity in our core business which will generate sustainable value for our customers, employees and shareholders as Indonesia continues to grow,” added Mr. Hungate.


>>> Hope the CEO is right

Quote: Additional S$4.4mio is just a small small fraction of the existing PATMI, there will not be much impact expected but is it worth paying 50.1% premium where the return is just merely a 3.7% (4.4 / 118). Unless that it is a price to pay for the passport to enter Indonesian market.

SATS is already 'in the Indonesia market' since 1984, when it started a PT JAS, a jointed venture with CAS. The acquisition slides state that 74% of CAS's revenue comes from PT JAS.

- Post acquisition, SATS will own ~70% of PT JAS. In light of the recent Indo-S'pore's spat over a certain warship's naming convention, there may be some additional potential regulatory risks (granted this is definitely not the same high profile/sensitivity as Temasek/DBS/Danamon).
- This is definitely not cheap, with a 50% premium over volume weighted last market price and P/E=28. Granted that SATS is already exposed to the Indonesian market through its 49.8% stake, is it a case of (1) desperate for growth to make this 'pricy move', (2) pre-existing intimate knowledge of JAS makes it extremely confident of its growth prospects to come?

Quote:Hope the CEO is right

Hope is sometimes a very expensive lesson to pay for.

SATS has launched series of company buyback of its shares.

The last it did was between 11 Nov 13 - 19 Dec 13, spent est.$8.509 million buying back at between $3.07-3.30. Price seem to have risen back until recently it fell again to as low as $2.93, a 2 years low.

Then it started buying back again, and has spent $9.339 million buying back till yesterday, there was also some large transactions today, it maybe buying back still.

While most companies buyback shares to reward its existing sharesholders, by reducing the number of outstanding shares, since dividends are not paid to Treasury shares it bought back.
Furthermore SATS seemed to only do so, when price seem to oversold. Its dividend of 10cent in Aug 14 & 5cent in Nov 13, if continues will equate to 4.95% (at $3.03 last close).

I like it also since its part of DividendWarrior's portfolio
[Vested]

Adapted recent buyback history from Shareinvestor.com, its a neat data to decipher corporate actions

[Image: Excel+calcluated+-+Recent+Coy+Buyback.png]

[Image: Shareinvestor+-+SATS+Company+Buyback+Chart.png]

(12-03-2014, 01:16 PM)tonyking Wrote: SATS has launched series of company buyback of its shares.

The last it did was between 11 Nov 13 - 19 Dec 13, spent est.$8.509 million buying back at between $3.07-3.30. Price seem to have risen back until recently it fell again to as low as $2.93, a 2 years low.

Then it started buying back again, and has spent $9.339 million buying back till yesterday, there was also some large transactions today, it maybe buying back still.

While most companies buyback shares to reward its existing sharesholders, by reducing the number of outstanding shares, since dividends are not paid to Treasury shares it bought back.
Furthermore SATS seemed to only do so, when price seem to oversold. Its dividend of 10cent in Aug 14 & 5cent in Nov 13, if continues will equate to 4.95% (at $3.03 last close).

I like it also since its part of DividendWarrior's portfolio
[Vested]

Adapted recent buyback history from Shareinvestor.com, its a neat data to decipher corporate actions

[Image: Excel+calcluated+-+Recent+Coy+Buyback.png]

[Image: Shareinvestor+-+SATS+Company+Buyback+Chart.png]

if you have learnt from your SIFU dividends warrior perhaps you can comment on the performance of their latest acquisitions performance.