Post on 27-Mar-2018
An Overview of SATS
Cho Wee Peng, CFO
SIAS Corporate Profile & Investment Seminar 30 November 2013
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This presentation may contain forward-looking statements regarding, among
other things, the Company's outlook, business and strategy which are
current as of the date they are made. These forward-looking statements are
based largely on the current assumptions, expectations and projections of
the directors and management of SATS about our business, and the industry
and markets in which we operate. These statements are not guarantees of
SATS’ future performance and are subject to a number of risks and
uncertainties, some of which are beyond the Company's control and are
difficult to predict. Future developments and actual results could differ
materially from those expressed in the forward-looking statements. In light of
these risks and uncertainties, there can be no assurance that the forward-
looking information will prove to be accurate. SATS does not undertake to
update these forward-looking statements to reflect events or circumstances
which arise after publication.
Forward Looking Statements
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Today’s Agenda
• SATS At A Glance
• Investment Thesis
• Summary
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SATS At A Glance
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Our Business
Airline Catering
Institutional
Catering
Passenger Services
and Lounge
Management
Ramp and
Baggage Handling
Airfreight Handling
and Logistics
Aviation Security
Cruise Handling
and Terminal
Management
Food Solutions Gateway Services
Airline Linen
Laundry
Food Distribution
and Logistics
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Key Figures
Revenue1
S$1.82bn
PATMI1
S$184.8mn
Total Assets2
S$1.96bn
Cash and Cash
Equivalents2
S$394.5mn
Debt-to-Equity2
0.09x
ROE1
12.7%
Market
Capitalisation3
S$3.5bn
Headcount2
~14,700
(1) For the twelve months ending 31 March 2013 (2) As at 30 September 2013
(3) As at 28 November 2013
2Q13/14 Highlights
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Revenue • Revenue in 2Q declined 2% year-on-year due to lower food
revenue (-5.9%), offset partially by higher gateway revenue
(+5.1%). $452.1m -2.0%
Operating Profit • Compared to revenue, operating expenditure declined at a slower
pace of 1%. Hence, operating profit fell 10.6%. $46.6m -10.6%
Share of results of
Associates/JVs, net of tax
• Better performance reported by associates in India and Indonesia
saw share of results of Associates/JVs increased 13.5%.
$11.8m +13.5%
PATMI • PATMI was 3.2% lower than a year ago.
$48.7m -3.2%
1H13/14 Highlights
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Revenue • Revenue in 1H declined 1.4% year-on-year due to lower food
revenue (-5.7%), offset partially by higher gateway revenue
(+6.5%). $886.6m -1.4%
Operating Profit • Operating profit fell 4.5% on rising employment costs.
$87.3m -4.5%
Share of results of
Associates/JVs, net of tax
• Better performance reported by associates in India and Indonesia
saw share of results of Associates/JVs increased 10%.
$24.3m +10.0%
PATMI • PATMI rose 3.6%. The Group benefitted from write-back of tax
provision of $4m for prior years which was partially offset by
impairment provision of $1.7m for assets held for sale.
• Excluding one-off items, underlying net profit was $96.6m.
$94.9m +3.6%
Debt-to-equity • Debt-to-equity ratio remained healthy.
• Cash and cash equivalents as at 30 September 2013 was
$394.5m.
• Free cash flow generated in the first six months was $60.1m.
0.09 times
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Road Map - To Expand Beyond Aviation & Singapore
By Business By Geography By Industry
FY1999
Gateway Services 38.1%
Food Solutions
61.6%
Corp 0.3%
Aviation 80.9%
Non-Aviation 18.8%
Corp 0.3%
Singapore 80.0%
Japan 15.4%
Others 4.6%
1H FY2014
Singapore 100.0%
Aviation 100.0% Gateway
Services 50.9%
Food Solutions
47.6%
Corp 1.5%
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Investment Thesis
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Investment Thesis
Unique Business Model
Strong Market Position
Positive Growth Prospects
Sound Operating Fundamentals
Resilient Cash Flows & Strong Balance Sheet
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Unique Business Model
Indonesia
Medan Batam Manado
Timika Balikpapan
Makasar
Denpasar
Surabaya
Yogyakarta
Jakarta
Singapore
Manila Ho Chi Minh City
Macau
Hong Kong Taipei
Beijing
Tianjin
Shenyang
Jilin
Tokyo
Hervey Bay Brisbane
Male
India
Gateway Services
Food Solutions
Gateway Services and Food Solutions Trivandrum
Mangalore Bangalore
Chennai Goa
Mumbai Hyderabad
Delhi
Amritsar
Kolkata Rockhampton
• Twin engines of growth in gateway services and food solutions
• Largest aviation services network in Asia
(Narita & Haneda)
Riyadh
Jeddah
Kaohsiung
Lombok
(1) Based on FY12/13 aviation statistics for Singapore and overseas operations
10 Countries
38 Airports
Flights(1)
441,958
Passengers(1)
65.1m
Meals(1)
80.0m
Airfreight(1)
4m tons
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Strong Market Position
Gateway Services(1)
Ground & Cargo Handling
Aviation Food Solutions(1)
Airline Catering
• Singapore aviation: first-choice service provider for close to 60 scheduled airlines at Changi Airport
SATS 74%
DNATA 26%
SATS 85%
DNATA 15%
(1) Source: Changi Airport Group; market share based on number of scheduled flights.
• Singapore non-aviation: leading institutional caterer with the largest capacity
• Regional aviation: majority of subsidiaries and JVs are either No. 1 or 2 service provider in the airports where they operate
ASIG 0%
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Positive Growth Prospects • Growing demand for air travel in Asia
2013 GDP forecasts: China – 7.6% and India – 3.8%(1)
YTD Passenger traffic on Asia Pacific airlines grew 7.2% against global average of 5.0%(2)
Asia-Pacific airlines remain one of the biggest contributors to global aviation industry
profit(3)
• Singapore - An established international hub Changi Airport is Asia’s leading air hub; 2012 passenger traffic +10.0% to 51.2m
T4’s completion in 2017 will bring Changi Airport’s capacity to 82m; T5 (to be operational
in mid 2020s) will double existing capacity to 135m
Singapore’s cruise passenger throughput is expected to grow from 913,000 in 2012 to
1.5m by 2017(4)
• Beneficiary of tourism growth in Singapore
Visitor arrivals +9.1% to 14.4m in 2012;
target to reach between 14.8.m to 15.5m in 2013(4)
(1) Source: World Economic Outlook Update (Oct 2013) (2) Source: IATA Air Passenger Market Analysis (Sep 2013)
(3) Source: IATA Financial Forecast (Sep 2013) (4) Source: Singapore Tourism Board
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Positive Growth Prospects
• Proposed acquisition of Singapore Cruise Centre
Grow SATS’ gateway business both in Singapore and Asia Pacific
Positive prospects for cruise in Singapore
Immediately accretive to earnings
Currently awaiting regulatory approval. Once these are obtained, we shall proceed to
convene an EGM to seek shareholder approval.
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Sound Operating Fundamentals
• Strong customer focus and consistently high service standards
• Economies of scale
• Steady focus on improving productivity
(1) Calendarised to March-year end; Source: FactSet, Company information as of latest financial year
Operating Margins – SATS vs. global peers(1)
Aviation Food Solutions Airport Service Providers Food Solutions
10.6% 9.1%
7.0% 5.3%
4.3% 3.2% 3.0%
SATS BBA Compass Sodexo Autogrill JohnMenzies
gategroup
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Resilient Cash Flows & Strong Balance Sheet • Strong cash generative businesses with short cash cycle
• Healthy cash reserves of S$394.5m and low debt-to-equity ratio of
0.09x(1)
Strong financial flexibility to seek strategic opportunities
(1) As at 30 September 2013
(2) Includes special dividends of S$0.06 per share, S$0.15 per share and S$0.04 per share for FY11, FY12 and FY13 respectively
S$ m
Dividend Payout Ratio(2) FCF & Dividends Paid(2)
156
190
132 104
208
108
142
188
289
167
FY08/09 FY09/10 FY10/11 FY11/12 FY12/13
Free Cash Flow Dividends paid
73.5% 78.6%
63.7% 71.4%
FY08/09 FY09/10 FY10/11 FY11/12 FY12/13
Ordinary dividend Special divdend
98.4%
168.8%
66.2%
90.3%
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Summary
• Food Solutions and Gateway Services are our core businesses
• Our strategy is to grow our businesses, organically and through
value creating acquisitions
• Our strong financial position provides funding capacity for
acquisitions
END
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