Case in point, Xiamen (second tier city) is currently the fourth largest Chinese city for Changi Airport, just behind the key metros of Beijing, Shanghai and Guangzhou.
The airline has reportedly grown passenger traffic at Changi at a compounded rate of 9% since 2009. This together with the relaxed visa requirements for Chinese to visit Singapore will surely aid in driving up numbers from China.
Now the important question is, who provides Gateway services and Food solutions for Xiamen Airlines?
Yes, SATS. This sleeping dragon is really awake. They've reported their Q1 results and are as follows:
Revenue down 4.2%
on weakening JPY, divestment of an Australian Subsi and the transfer of their food distribution business to their JV, SATS BRF Food formed earlier this year.
Profits up 14.5%
due to excellent cost control. Staff cost, the largest component, was down $3.8m due to a 550 reduction in headcount. Cost of sales also reduced at a higher pace than revenue from better sourcing. Also, Share of Associates and JV rose 23% due to better contribution from both Gateway and Food solutions.
EPS up 15.4%
Interim Dividend 9 cents (up 1 cent)
The mystery case of XD status
24 July (Friday) was SATS XD status. Technically, the price will fall by about 9 cent (from $3.69 to $3.60) due to XD. This happened early in the trading hours until about 1030am.
SATS closed at $3.80 instead, registering a 11 cent increase despite a 9 cent XD. This is either pure speculation or insider trading. Either way, their near term catalysts remains.
- Rebates offered by CAG
- Cost controls and productivity drive
- Increase in DPS for 2015
- Jetstar contract win
- Improvement in Japanese operation from Delta Airline win
- CAG & Xiamen Airlines MOU until 2018
Earlier, I predicted SATS Q1 results to come in 7-8% growth. I've to say a 14.5% growth was pleasant. Overall revenue fall for the group should recover with the recent contract wins and the easing of Visa requirements for Chinese to Singapore.
I'll remain vested =)
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