SATS Ltd ($S58) SGX Stock To Benefit From Tourism
There is an English saying - “Behind every successful man is a woman”.
Apply this analogy (figuratively) to Tiger_chat topic “Share one SGX stock that could benefit from China’s outbound tourism”; I found the perfect SGX stock.
On this topic, a few Tiger members mentioned $SINGAPORE AIRLINES LTD(C6L.SI)$ (Sgp’s national carrier) as the stock that benefits from the Chinese dollars. This is true !
Behind “ the successful SQ” though is local stock Singapore Airline Terminal Services - $SATS LTD.(S58.SI)$, that stands to benefit even more from influxes of tourists (not only from China but from the world over).
Let’s find out together, shall we ?
SATS stands for Singapore Airport Terminal Services.
It is a (local) Singaporean airport service company that operates (a) main ground handling and (b) in-flight catering service provider at Changi Airport.
It manages 80% (approx) of Changi Airport's ground handling & catering business.
In 1967, the early years’ ground-handling services were provided by a dept of Malayan Airways that eventually became Malaysia-Singapore Airlines (MSA)
With the dissolution of MSA into two entities (a) Singapore Airlines (SIA) & Malaysian Airline System (MAS); it is only natural that Singapore needed to setup its own airport terminal services as a separate, yet wholly owned subsidiary company
On 15 Dec 1972, SATS was formally corporatized.
SATS’s growth did not happen by chance. It grew in tandem with Singapore Airline, the Airport & Singapore the Island state, a tourist hotspot.
It never stopped growing in size & volume; expanding its service capacities as the Paya Lebar airport gave way to the Changi International airport.
As Changi International airport grew from one terminal to four terminals
It grew to its current size thru strategic acquisitions, locally & globally.
And like they say, the rest is History.
ALL services provided by SATS Ltd.
WHY Is SATS Limited - The SGX Stock ?
Part of being or trying to become an “astute” investor is to know a little more about the company one would be parting & parking one’s money with.
As such, one cannot get away with not looking (however brief) at a company’s background info on all things financial.
For starters, SATS Ltd stock price “bottomed” at $2.55 on 10 Nov 2022.
Presently, this looks like the support-level price.
It may change, just be aware.
Scratching the company’s financial profile (on the surface).
Its a $3.148 Billion market cap company.
Its has a beta that is neutral at 1.03; that is considered “stable”.
It has a medium load trading volume.
Coming out of an almost 3 years covid lockdown, a Revenue of $475 Million from the latest quarterly earnings report - credible !
SATS Ltd - Revenue contribution based on Segments'' Analysis
This is the more “interesting” part of SATS Limited.
Its a company with “diversified” core businesses; as could be seen from above diagram.
It has core businesses in areas of (a) Food & (b) Gateway.
Within these 2 cores it could be further classified as catering to (a) Tourism & (b) Non-tourism industries.
Lastly, it is an International company with operations presence in other countries too (Japan, Greater China & Asean); not just Singapore per se.
As the Principal food catering arm of Singapore Airlines, an increased in SQ’s flights & customer load translates into “more” businesses for SATS Limited.
SATS Ltd also extends to meals prep for other airlines too.
With the refreshed Changi Terminal Two resuming operations since 11 Oct 2022, all 4 Changi Terminals are fully operational again; just liked it was back in early 2020 before the pandemic onset.
SATS Ltd buys Worldwide Flight Services (WFS)
Looking forward into 2023 and beyond, there will be many obstacles and mountains to overcome as the Management and its leadership team will be stretched to the limits with the acquisition of Worldwide Flight Services (WFS)
The news broke on 28 Sep 2022. Acquisition is expected to be fully completed (purchase & all) by Mar / Apr 2023.
This will propel SATS Limited to become the biggest air cargo handler in the world; another accolade in the bag ?
Speech Extract From SATS Limited CEO
“Despite headwinds, our underlying business performance has shown improvements as we execute on our twin-engine growth strategy and capture meaningful business value. While cargo volumes have softened, the reopening of China borders is expected to improve volume throughput. Alongside our strong Singapore focus, we are building geographic and business resilience with the proposed acquisition of Worldwide Flight Services. We are heartened that at the recent EGM, shareholders gave us their vote of confidence, supporting this transformational transaction and our growth direction. We are working on closing the acquisition and delivering a smooth transition to unlock the synergies of our combined operations and scale.”…. SATS Limited, President & CEO, Kerry Mok
Do you think SATS Limited is THE Sgx stock to invest in; given the outlook, challenges and possible rewards to be reaped ?
Do you think SATS Limited has a lot to gain not just from China tourists per se ?
Do you think SATS Limited stock price of $2.80+ will remain in the doldrum for long ?
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