- Excluding government reliefs, one-offs and professional fees related to the WFS deal, SATS’ core net loss stood at S$5m-10m in 2QFY23, a meaningful improvement over 1QFY23’s ex-relief core net losses of S$31.9m.
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- Management has updated its financing plan for the WFS deal to use only straight equity and more debt.
- Maintain BUY recommendation on SATS with an unchanged target price of S$3.08.
Meaningful improvement in SATS' core profitability.
- SATS (SGX:S58) recorded headline net losses of S$9.9m in 2QFY23 (1HFY23: S$32.5m losses). Stripping out a one-off disposal gain of S$1.9m and government reliefs of S$11.4m, SATS’ 2QFY23 core net loss stood at S$21.6m in 2QFY23.
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- Passenger business volume continued to recover; a slight dip in air cargo volume. In line with the aviation sector’s recovery, SATS’ business volume continued to recover in 2QFY23 – the volume of flights handled, meals served and passengers handled rose 20.0%, 28.7% and 29.9% q-o-q respectively.
- Cargo tonnage handled declined 2.6% q-o-q, likely due to a normalisation of the air cargo business from the pandemic high and the slower near-term demand amid the weakening macroeconomic outlook.
- Group revenue rose 14.2% q-o-q to S$429m in 2QFY23, driven by q-o-q higher revenue across all regions.
Expecting a turnaround for SATS in 3QFY23.
- Read more at SGinvestors.io.
