AVIATION | Staff Reporter, Singapore

Rising tourist arrivals could uplift SATS

It can also be buoyed by the capacity addition of its key customer Japan Airlines.

The rising tourist arrivals by sea which improved ship calls at the Marina Bay Cruise Centre (MBCC) could boost SATS’ profitability in the coming quarters, UOB Kay Hian (UOBKH) said.

In Q2, inbound tourist arrivals by sea rose 24% YOY which is a jump compared to the 11.4% increase in Q1.

“Q3’s growth is seasonally stronger, and thus growth could exceed 2Q’s,” the firm noted. “If so, SATS’ gateway services revenue and profitability are likely to rise.”

According to the research firm, much of the Q2 growth in tourist arrivals was backed by the 248% surge in Chinese arrivals. Meanwhile, Indonesia still remains the largest source market, accounting for almost half of arrivals and rising 11% YTD.

Meanwhile, UOBKH also mentioned that SATS’ Japanese catering arm TFK could also be buoyed from the higher capacity addition of its key customer Japan Airlines (JAL).

“JAL has added several international flights since May, all on wide-bodied aircraft. This should lead to higher meal volume and profitability at 51% owned TFK,” UOBKH explained.

According to the research firm, TFK’s Q1 FY 2019 revenue rose 3.1%.

“SATS is optimistic of future growth, citing rising Chinese visitor arrivals and JAL’s international capacity expansion,” UOBKH noted.

Moreover, the research firm believes that the temporary closure of Kansai airport, will not significantly hurt TFK as it primarily operates out of Narita and Haneda airports.

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