SATS

[zerobeta]

reason for the rally i think is because of a very decent profit growth of 12% in 1Q2016. The company has been focusing on cutting costs through increase in productivity/ adoption of technology which paid out well; staff costs declined in 1Q2016 (despite the tight labor market and the fact airline is a labor-intensive sector) and operating margin thereby inched up from 9.1% to 10.6%.

but valuation wise it's too expensive already IMO.. P/E is 2SD above historical mean and dividend yield is merely 3.8% (unless they can grow DPS by 20% this year which should push back yield to 4.5%)...

the previous post mentioning LCCs taking up the traffic growth at Changi Airport is a good case study to dig deeper...

[oyanren]

Still don't quite understand the run-up in SATS' share price since Jan-15.  Q1 FY15/16 saw an increase in bottom line, but top line saw a drop of 4.2%.  Full year 2014/15 also saw a 1.87% drop in revenue, which also means there has been no growth.  Agreed that management has done a pretty good job in controlling costs, and it has yielded results but how much more can they cut?  Recent article by Singapore Business Review also highlighted dimming outlook from Changi Airport.  FCF down 10.1% Q1 FY2015/16, and TFK seems to be dragging SATS down.  Valuation IMO expensive 21.78 times price over earnings.

A YTD 21.86% run-up in SATS' share price is really impressive, but I just can't seem to gras the reason(s)..  Can value buddies here shed some light please?

Not vested.

[CY09]

Possible explanations (mere speculations): 1) Growing profitability as seen by the improving full year results and Q1. 2) Entry into the STI index, 3) recognistion of its cash flow strong generation business and STI Index status leading to funds and insurance buying it.

[Dividend Knight]

Still don't quite understand the run-up in SATS' share price since Jan-15.  Q1 FY15/16 saw an increase in bottom line, but top line saw a drop of 4.2%.  Full year 2014/15 also saw a 1.87% drop in revenue, which also means there has been no growth.  Agreed that management has done a pretty good job in controlling costs, and it has yielded results but how much more can they cut?  Recent article by Singapore Business Review also highlighted dimming outlook from Changi Airport.  FCF down 10.1% Q1 FY2015/16, and TFK seems to be dragging SATS down.  Valuation IMO expensive 21.78 times price over earnings.

A YTD 21.86% run-up in SATS' share price is really impressive, but I just can't seem to gras the reason(s)..  Can value buddies here shed some light please?

Not vested.

Potential contract wins for gateway services at the new Changi Terminals 4 and 5.

Btw, the traffic at Changi Airport is recovering.

Source: Changi Airport's passenger traffic up 3.9% in September

(Vested)

[valuebuddies]

Results is out:

http://infopub.sgx.com/FileOpen/SATS_2QF...eID=376528

Despite lower revenue in both Q1 and Q2 versus corresponding year, gross operating profit increased thanks to "the continuous efforts to control costs" as claimed by the management. EPS for 1H = 9.8c means a PE of close to 20 times on current share price. PB is also close to 3 times at presently. Interim dividend maintained at 5c, together with the final dividend of (assuming) 9c, total yield would be 14c which is merely 3.6%.

The share is a bit pricey now probably due to investor's expectation on future growth. 

[ vested ]

[oyanren01]

I quite agree with Dividend Knight that the run up in SATS Ltd could be due to potential contracts in T4 and T5. Cost cutting measures - SATS Ltd can't exactly cut its way to growth isn't it? Only a ST measure.


Sent from my iPhone using Tapatalk

[Bytesizedinvestments]

Another JV by SATS to increase its product line and reach....

SATS FORMS TRAVEL RETAIL JOINT VENTURE WITH DFASS (21 Jan 16)

SATS Ltd. (SATS), through its wholly-owned subsidiary Asia-Pacific Star Private Limited, and DFASS (Singapore) Pte. Ltd. (DFASS) signed an agreement to set up a 50:50 travel retail joint venture to be incorporated in Singapore.

The new company (DFASS SATS) will provide inflight duty-free and duty-paid sales, offer mail order and pre-order service, supply liquor for inflight pouring services, and operate ground-based duty-free and duty-paid retail sales in Singapore.

DFASS will transfer certain assets including merchandise inventories and point-of-sale devices to DFASS SATS. SATS will contribute to the joint venture by providing bar-cart packing, warehousing and cabin loading services while DFASS will continue to drive the airline and ground retail programme management including merchandising and sourcing, as well as the procurement and supply of the selling merchandise. In addition, the new company will utilise DFASS’ state-of-the-art point-of-sales equipment and proven backoffice, as well as its eCommerce solution, complementing efficiency and maximising sales for both parties. Through SATS’ ground presence, DFASS SATS will be able to extend its reach to more passenger touchpoints.

DFASS SATS will also pursue duty-free concession at Marina Bay Cruise Centre Singapore (MBCCS), enabling it to tap on the cruise passenger flow to pursue ground-based travel retail opportunities in addition to inflight, mail-order and pre-order sales. MBCCS is operated by SATS-Creuers Cruise Services Pte Ltd, a 60:40 joint venture between SATS and Creuers del Port de Barcelona S.A..

Alex Hungate, President and Chief Executive Officer of SATS said: “SATS and DFASS can offer more convenient shopping opportunities to the fast growing travel retail market. The joint venture will benefit from DFASS’ wide selection of high quality products and point-of sale technology. Together, we will innovate and develop new ways of retailing to travellers
and fulfilling their orders.”

Bernard Klepach, Owner, Chairman and Chief Executive Office of DFASS Group agreed and said: “As the leading food solutions and gateway services company in Asia, SATS serves millions of passengers and end-users each year, and we are able to gain insights about passenger consumption behaviour. I see synergy partnering with SATS where we leverage each other’s core strength to enhance our offering to Singapore-based airline customers, extending our reach to airline customers from the air, to the various touchpoints on ground. The benefit shall include cost savings from our alliance.”

(Vested)
____


Financial Freedom can be achieved through prudence and patience capital.

http://www.bytesizedinvestments.com/

[weijian]

SATS PARTNERS WITH HONG KONG AIRLINES IN HONG KONG HUB

Hong Kong Airlines to engage SATS HK and AAT at its Hong Kong hub for ramp and cargo handling services respectively
SATS sells a 51% and a 4% stake in SATS HK and AAT to Hong Kong Airlines respectively

http://infopub.sgx.com/FileOpen/PRESS%20...eID=443732

[weijian]

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)

They are back after 4years.

Qantas flights from Sydney to London to transit in Singapore instead of Dubai

[BENGALURU] Australia's Qantas Airways Ltd said it will extend its partnership with gulf carrier Emirates for another five years, but dropped its own flights to Emirates' Dubai hub to boost capacity into Asian destinations.

Australia's biggest airline said it would return to flying its flagship Sydney-London "kangaroo route" via Singapore rather than Dubai.

http://www.businesstimes.com.sg/transpor...d-of-dubai

[weijian]

SATS paying for a stake into the Malaysian ground handling market. AirAsia is a little bit of a hot potato in Malaysia, but it's probably the right partner (in terms of growing into the ASEAN markets). SATS gets to avoid the big CAPEX of buying new planes/routes that AirAsia is liable for, but still exposed to a tailwind of the expansion via the backend operations.

SATS AND AIRASIA IN PARTNERSHIP TO GROW GROUND HANDLING ACROSS ASEAN

Services and Food Solutions, and AirAsia Berhad (AirAsia), Asia’s leading low-cost carrier, today formalised a ground handling partnership in the fast-growing Asean region. SATS has formed a new ground handling entity, SATS Ground Services Singapore Pte Ltd (SGSS) to serve customers at Changi Airport’s new Terminal 4. Under the terms of the partnership, SATS will acquire a 50% interest in Ground Team Red Holdings Sdn Bhd (GTRH) in exchange for SATS’ 80% stake in SGSS and aggregate cash consideration of SGD119.3 million (approximately MYR 372.2 million). GTRH will be renamed SATS Ground Team Red Holdings Sdn Bhd, which will be the 50:50 joint investment vehicle of AirAsia and SATS that will hold stakes in both its Malaysia and Singapore subsidiaries, Ground Team Red Sdn Bhd (GTR) and SGSS respectively.

AirAsia will effectively own 51% of GTR and 40% of SGSS while SATS will effectively own 49% of GTR and 60% of SGSS. Both companies will also be responsible for growing the ground handling business in their respective markets and will explore expansion into Indonesia, the Philippines and Thailand in the near future.

SATS PR: http://infopub.sgx.com/FileOpen/SGX%20An...eID=475912
AirAsia PR (more informative with diagrams): http://disclosure.bursamalaysia.com/File...TTACHMENTS