SATS - OCBC Investment 2023-06-01: Successful Integration Of WFS Will Be Key

• SATS (SGX:S58)’s 4QFY23 revenue rose 59.6% y-o-y to S$478.1m, boosted by stronger performances from both Gateway Services (+81.0% y-o-y) and Food Solutions (+42.3% y-o-y), on the back of a continued recovery in aviation. On a q-o-q basis, 4QFY23 revenue was up marginally by 0.5% due to seasonality impact (3Q is typically a strong quarter).
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• Excluding the impact of government relief of S$19.7m (no more relief to be recognised in FY24), SATS's PATMI would have been at a loss of S$12.2m during the quarter, compared to a loss of S$13.7m in 3QFY23.
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Operating statistics improved but cargo demand was weaker

• SATS’s operating statistics continued to show an uptick in 4QFY23 on the back of a recovery in the aviation industry. Despite being a seasonally weak quarter, SATS’s flights handled improved by 7.0% q-o-q in 4QFY23 while passengers handled grew 5.6% q-o-q. Separately, meals served rose 11.2% q-o-q.
• On the other hand, cargo demand weakened with volume processed declining 9.9% q-o-q due to macroeconomic headwinds.
• Comparing to pre-COVID levels, SATS’s flights handled, meals served and passenger handled in 4QFY23 recovered to 76%, 91% and 72% respectively. On a same-store basis, cargo volume was at 90% of pre-COVID levels or 127% with the inclusion of Asia Airfreight Terminal (AAT).

Cost savings from earlier redemption of WFS’ bonds

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OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2023-06-01 SGinvestors.io

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