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Adapting to Crisis

Company Profile

SATS Ltd was listed in May-2020 @ $2.25. The company is in the business of food solutions and gateway services.

Food solutions encompass airline catering, central kitchens for food service chains and institutions.

Gateway services comprise of airfreight handling, passenger services, ramp & baggage handling, aviation security services, aircraft interior & exterior cleaning and cruise centre management. 

The firm operates in over 65 locations across 14 countries in Asia Pacific, United Kingdom and Middle East. 

Financial  (FY-March)

Revenue fell 50% in FY21 with company recording first net loss since FY05 due to COVID-19 pandemic.

Geographical mix FY21 vs FY20 indicate the relative impact from key countries closing its borders:

  • Singapore  88% vs 80%

  • Japan            6% vs 13%

  • Others           6% vs 7%

China and India markets are addressed via associates and joint ventures.

Before Pandemic

Revenue in FY20 grew 6% to $1.94B with gross margin declining to 26.4% in FY20 from 28.0% in FY19. Between FY16 - FY20, expense drifted upward from 13.9% to 14.5%. Resulting in operating margin falling from a stable 13.5% to 11.7%.

Share of profits from associates between FY16 - FY19 was $48M to $71M and in FY20, its contribution fell to $12M. 

Net profit declined 5% in FY19 and 32% in FY20.

Adapting to Crisis

Pandemic have accelerated shift towards digitisation and e-Commerce. This has led to increase in demand for air cargo. SATS cargo tonnage have gradually improved from 221,000 tons to 387,000 tons between 1QJun20 and 1QJun21. 

The company is also expanding her non-travel related businesses in catering, food manufacturing, trading & distribution and retail. It constitute 46% of revenue in 1QJun21. 

Employees number have been reduced by 18.5% from 14,000 to 11,000.

Green Shoots - 1QJun21 vs 1QJun20

Revenue in 1QJun21 grew 31.6% vs 1QJun20. PATMI was $6.4M. Without government reliefs, the firm would report a loss of $35.6M.

At segment level, Food solutions grew 8.4% to $147M and Gateway Services grew 77.4% to $127M. 


There are clear signals that the industry is recovering. However, the recovery is expected to be uneven, divided into rich economies and developing economies. Domestic travel in rich economies is trending towards pre-pandemic level and international travel is still a few years from full recovery. Developing economies will require longer lead-time

SATS will likely emerged from this crisis a broader base business as non-travel portfolio continue to grow. Return to FY20 level of revenue is likely to be years away. Margin may remain challenged as growth on non-travel business will require time to scale up. 

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