SATS - OCBC Investment 2021-05-28: Aided By Non-Aviation Revenue

SATS LTD. (SGX:S58) | SGinvestors.io SATS LTD. (SGX:S58)

SATS - Aided By Non-Aviation Revenue

  • SATS reported FY21 net loss of S$78.9m.
  • Aviation revenue fell 66.5% y-o-y.
  • Non-aviation segment contributed 44% of FY21 revenue.

SATS's FY21 result met expectations

  • SATS (SGX:S58)’s FY21 revenue fell 50.0% y-o-y to S$970m, pulled down by lower Food Solutions (-46.4% y-o-y) and Gateway Services revenue (-55.1% y-o-y) as a result of persistent headwinds from COVID-19. Share of associates/JVs were similarly impacted which recorded a loss of S$48.0m as compared to a gain of S$11.8m in FY20.
  • A total of S$109m of impairment charges and credit loss provisions were made on investments and associates/JVs.
  • All-in, SATS's FY21 net loss attributable to shareholders was S$78.9m, as compared to PATMI of S$168.4m in FY20, in-line with our expectations.

Cargo volume recovered to ~90% of pre-COVID-19 levels

  • On a q-o-q basis, SATS’s revenue rose 11.0% q-o-q to S$278.5m in 4QFY21, driven by strong cargo volume, partially offset by lower passenger and flights handled (-9.1%/-8.2% q-o-q). 4QFY21 bottomline turned to a profit of S$0.8m, after three consecutive quarters of losses, thanks to S$51.1m of government relief.
  • Management mentioned that SATS’s cargo volume has recovered to ~90% of pre-COVID-19 levels, driven by demand from e- Commerce, temperature sensitive supplies such as vaccines and perishables. Based on IATA’s latest forecast, cargo volume is expected to grow 13.1% y-o-y and exceed 2019 levels by 2.8% in 2021.

No dividend was declared

Chu Peng OCBC Investment Research | https://www.iocbc.com/ 2021-05-28
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