SATS - UOB Kay Hian 2023-08-16: 1QFY24 Core Performance In Line; Focusing On Integration & Synergy Delivery

• Excluding accounting treatment difference and one-off integration expenses, SATS (SGX:S58)’s 1QFY24 core net loss of S$17.4m was in line with our expectations.
• Core earnings of SATS’s original businesses achieved a turnaround in 1QFY24 while WFS’ performance was still affected by the subdued near-term global trade outlook. Management is committed to accelerating the integration of WFS and driving synergy realisation.
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Core performance in line with our expectations.

• SATS’s headline net loss of S$29.9m in 1QFY24 (Apr to Jun 2023) came in better than our previously guided net loss of S$57m-83m, only due to the change in accounting treatment towards:
  1. - Read this at SGinvestors.io -
  2. WFS’ previously captialised interest cost of S$20m.
• Previously, we were expecting this S$60m accounting impact to be charged through SATS’s P/L in 1Q as per SATS’s previous guidance. However, after a review with its financial advisers, SATS has decided to account for these items through balance sheet (giving rise to higher acquisition goodwill), instead of expensing them through P/L. Excluding this S$60m accounting difference and the impact of one-off integration expense of S$12.6m, the Group’s 1QFY24 core net loss of S$17.4m is deemed in line with our expectations.

SATS’ original businesses turned around.

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Roy Chen CFA UOB Kay Hian Research | https://research.uobkayhian.com/ 2023-08-16 SGinvestors.io

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