SATS (SGX:S58) reported an 8% y-o-y increase in 3QFY26 revenue to S$1.6b. This was largely driven by Gateway Services, where revenue jumped 10% y-o-y to S$1.3b, underpinned by record high cargo tonnage of 2.6m tons (3.5m tons including associates and joint ventures).
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9MFY26 results met our expectations.
Operating expenses grew at a slower 7% y-o-y to S$1.3b; as a result, operating profit came in 18.8% higher y-o-y at S$151.3m, translating to a 0.8 percentage point expansion in EBIT margin to 9.2%.
Together with a 14.9% increase in share of associates/joint ventures (SoAJV) to S$31.7m, PATMI for the quarter was 20.4% higher y-o-y at S$84.7m.
On a 9MFY26 basis, SATS's revenue and PATMI grew 8.7% and 14.4% y-o-y to S$4.6b and S$234.5m, constituting 76.0% and 73.7% of our initial full year forecasts, respectively – which we deem to be broadly in line with our expectations.
Constructive outlook amidst continued gains in cargo market share and robust passenger volumes.
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During the quarter, SATS continued to win new cargo and ground handling contracts with key partners like Saudia Cargo at eight airports, Allegiant Air at Sanford Airport, and Azul at Viracopos Airport.
We like that the company’s geographically diversified footprint and extensive network allow it to capture shifting trade flows amidst heightened tariff uncertainty. At the same time, international travel demand remains relatively robust.
Revised fair value estimate of S$4.32.
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Above is an excerpt from a report by OCBC Group Research. Clients of OCBC Securities may be the first to access the full PDF report @ https://www.iocbc.com/.
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