SATS, the sleeping dragon, is awake

SATS announced its Q4 and full year results today. Boy oh boy, things are looking good.

Results Summary

Revenue declined by 1.9% amidst the challenging environment

Operating Profit increased 4.1% due to excellent cost control

Underlying profit increased 7% due to increased contributions from their JV/Associates.

These are really impressive numbers, considering that revenue has shrank and yet SATS managed to improve their profits year-on-year.

I reckon their coming quarters to yield better results due to the additional cost savings stemming from the reduction and rebates of aeronautical fees in Changi and their continued productivity drive.

Future Catalysts

Over the longer term, with the upcoming completion of T4 and T5, Changi should see a further increase in air traffic. SATS, having about 80% of Changi's market share would stand to benefit largely from Changi's growth as well.

Also note that SATS has a foot in Singapore SportsHub via its wholly owned Subsidiary SFI. Should the Government's vision of creating a vibrant sporting country come true, SATS would also stand to gain from this.

Increasing core dividends

Core dividends also increased from 13 cents to 14 cents. Note that SATS' core dividend has been steadily increasing. That's another encouraging sign for long term investors.

Market Leader

Lastly, what I love about SATS is its great reach and market share it holds in the industry.

In-flight caterer/Ground Services - Market Share

Singapore - 80%

Vietnam - 75%

Maldives - 70%

India - 67%

China - 60% 

Japan - 50% in Narita, 40% in Haneda

Hong Kong and Taiwan - 30%

Macau - 100% (only in-flight caterer)

A footing in the Cruise Industry

SATS also owns Marina Bay Cruise Centre and their average market share of the Cruise Segment is about 40%

Owns SFI (Singapore Food Industry)

If you've served the Army, you would know that SFI is one of the caterers for the Army's cookhouses. SFI is also used for events like YOG, NDP parades etc. How "safe" can this business be?

At the closing price of $3.21, that translate to a dividend yield of 4.36%. Yummy!