SATS - Phillip Securities 2023-11-14: A Weary Recovery

SATS - A Weary Recovery

SATS (SGX:S58) | SGinvestors.ioSATS (SGX:S58)
  • SATS (SGX:S58)'s results were in line with our expectations, though the mix was disappointing. Food solutions remained in the red with operating loss of S$0.9mil despite recovery in revenue to pre-COVID levels. WFS contributed operating profit of S$73mil for the first time, or operating margin of 5.1%.
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  • SATS's net debt as at end Sep 2023 was S$2.3bn or net gearing of 0.9x.
  • Downgrade SATS to REDUCE (from NEUTRAL) and a lower target price of S$2.23 (previously S$2.51), to factor in higher working capital at WFS.

The Negatives

SATS-only operating margin was just 0.3%.

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  • We believe the key reasons were
    1. rise in operating costs, chiefly staff costs due to a manpower shortage in Singapore and Hong Kong;
    2. fall in revenue from non-aviation (- 13.8% y-o-y) due to lower catering and distribution demand.
  • Flights at Singapore Changi Airport have been restored to about 89% of pre-COVID levels. Further growth is limited given the manpower and capacity bottlenecks faced by airlines. Thus, we are concerned that further improvement in food solutions earnings could be muted.

1H24 EBIT barely covered interest expenses.

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Above is the excerpt from report by Phillip Securities Research.
Clients of Phillip Capital may be the first to access the full report in PDF @

Peggy Mak Phillip Securities Research | 2023-11-14

Previous report by Phillip:
2023-08-17 SATS - Acquisition Costs Weighed On 1Q24 Earnings.

Price targets by 4 other brokers at SATS Target Prices.

Listing of research reports at SATS Analyst Reports.

Relevant links:
SATS Share Price History,
SATS Announcements,
SATS Dividends & Corporate Actions,
SATS News Articles


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