SATS

[¯|_(ツ)_/¯]

SATS@387
1Q2021 Result
https://links.sgx.com/FileOpen/SATS_1QFY...eID=675505


Stay home and stay safe, everyone.

[weijian]

SATS raised a lot of cash (close to half a billion) into its balance sheet during Covid-19, in order to endure the winter.  With a combination of gov grants and subsequently using up the cash on its balance sheet, there is still substantial ~200mil of the covid-19 era raised cash left and it would be prudent to invest in future capabilities as it pivots into food processing.

DEVELOPMENT OF SATS FOOD HUB

Apart from housing the institutional catering operations transferred over from the Pandan Loop Properties, the development of the SFH will see advanced food manufacturing with automation and Internet of Things (IoT) deployed to achieve operational efficiency for the business. The SFH will also incorporate an open innovation platform to test-bed new products and services, and provide the channels to commercialise viable food solutions in new markets. The total development costs for the SFH, including equipment, is projected to be approximately S$150 million.

https://links.sgx.com/FileOpen/Developme...eID=706876

[weijian]

SATS share price has dropped almost 20% since they confirmed the rumors ~1 week ago, with majority of the drop coming in the last 2 days since they confirmed the purchase.

It is obvious that the Market doesn't like this deal because it is big and risky. It is not easy to merge different geographies with different cultures. But most importantly, a huge rights issue (almost 50% of equity) is required to fund it. And because a huge rights issue is required, a big discount may probably be needed. Finally, SATS is buying from a PE firm and PE folks are not easy fellas when you find them on the opposite side of your trade.

SATS to buy Worldwide Flight Services for up to 1.3b euros, plans S$1.7b equity fundraising

Under the agreement, SATS will acquire all the interests in WFS for an enterprise value of about 2.3 billion euros. This consideration was arrived at on a “negotiated arm’s length basis” and determined after taking into account the financial performance and financial position of WFS, among other factors.

SATS intends to fund the acquisition through an equity fundraising worth S$1.7 billion, with the balance amount to be funded through internal cash resources. The company said it has also obtained an acquisition bridge facility for a Singapore dollar equivalent amount of up to 1.2 billion euros.

https://www.businesstimes.com.sg/compani...17b-equity

PR: https://links.sgx.com/FileOpen/SATS_Medi...eID=732671
Announcement: https://links.sgx.com/FileOpen/SATS_Chap...eID=732670

[brattzz]

SATS definitely has to overpay to meet PE's KPI to transacted on the highest price possible!
there's more to drop from here! :O

[weijian]

Conducive market conditions? When the market has been informed and is just waiting for it to happen, will it ever be conducive enough?

Sats to raise about S$800m in rights issue for WFS acquisition

INFLIGHT caterer and ground handler Sats : S58 +3%on Thursday (Dec 1) said it would raise up to S$800 million via a renounceable underwritten rights issue to partially fund its acquisition of air cargo handler Worldwide Flight Services (WFS).

The rights issue is expected to be launched in the first quarter of next year and is subject to “conducive market conditions” and the satisfaction of regulatory approvals.

https://www.businesstimes.com.sg/compani...cquisition

[CY09]

Since the acquistion announcement, the share prices have fallen by 30%. Hence there is already a discount priced in ; p

If SATS announces a discount of say10% to current share price of 2.75, that would mean it is about a 40% discount to the day prior to their acquistion announcement.

[BRT]

Since the acquistion announcement, the share prices have fallen by 30%. Hence there is already a discount priced in ; p

If SATS announces a discount of say10% to current share price of 2.75, that would mean it is about a 40% discount to the day prior to their acquistion announcement.

i almost wanna see the share price remain depressed until then to find out what the management will do with their hands tied by the market. likely grudgingly "forced" to proceed with a discount to an already discounted price.

from the share price point of view, SIA seems slowly grinding up, and also resumed some dividend, while SATS still in the covid pits. hope they don't miss out on too much of the recovery.

[CY09]

Personally, I do not want the acquistion to go through.

WFS acquistion is coming down from a high because its profit grew tremendously during the covid boom as it is linked to air cargo. SIA cargo segment is a good proxy where utilisation and profits have fallen since the relaxation of measures. With the decline in volume due to the pandemic boom being over, Im not sure if WFS is able to replicate its EURO 66 million profits, hopefully SATS has a performance clause in it where for the next 3 years if the company does not obtain EURO 66-70 million profits, the selling company pays a performance gurantee.

[BRT]

Personally, I do not want the acquistion to go through.

WFS acquistion is coming down from a high because its profit grew tremendously during the covid boom as it is linked to air cargo. SIA cargo segment is a good proxy where utilisation and profits have fallen since the relaxation of measures. With the decline in volume due to the pandemic boom being over, Im not sure if WFS is able to replicate its EURO 66 million profits, hopefully SATS has a performance clause in it where for the next 3 years if the company does not obtain EURO 66-70 million profits, the selling company pays a performance gurantee.

the pandemic ecommerce boom has misled a lot of companies and investors. the fear seems to be coming through with recent comments by WFS.

"WFS posted a net loss of 30.9 million euros for the third quarter to September, compared with earnings of 26.8 million euros in the year-ago period, said its unaudited financial statements released last week.

This was even as the company’s revenue increased 44.2 per cent to 511.3 million euros.

Margins were hit by a 57.8 per cent rise in operating overheads and field expenses, and were mostly associated with acquisitions WFS had made in the United States last year.

Expenses also rose because of investments in business development and information technology, the company said."

Worldwide Flight Services CEO sees near-term softness in cargo, but robust long-term prospects
https://www.businesstimes.com.sg/compani...-long-term

[CY09]

Yes agreed, I have a feeling some Singapore companies are buying companies on a FOMO mentality, similar to FTX where very low level of due dillgence and thinking are doled up.

Maybe its time for the Singapore government to consider making the local business environment tough so that such companies learn to be prudent. I have been a long supporter for the SAF cookhouse landscape to be opened up to other vendors beside only NTUC and SATS. The food margin to cater for SAF is known to be exceptionally high where 2M2Veg is $6.50 for NSman who skip their indented meals. Chang Cheng/Kofu/Kimly are likely able to bid at lower prices as they are charging 2M 2Veg at about $5 at coffeeshops

Will gladly hope this segment opens up