Its partnership with AirAsia will open access to 15 Malaysian airports.
SATS is positioned for a recovery this year, according to OCBC Investment Research, as its aviation segment maintains its momentum with the joint venture with AirAsia already making positive, though not yet significant, gains to the company’s balance sheet.
SATS posted a muted year-end performance as profits dipped 1.8% YoY to $65.4m in Q4 with revenue edging down 0.5% following a deconsolidation of SATS HK Limited. Contributions from food supplies also dipped 2.4% YoY to $228.3m which was offset by a slight 1.7% increase from gateway services which hit $194.7m.
However, with the JV providing access to 15 airports in Malaysia, SATS is set to take off from its slight earnings slump as it steadily builds its overseas presence, according to analyst Eugene Chua.
“Beyond these, a potential catalyst would be the potential partnership with Turkish Airlines to provide in-flight catering services at Istanbul New Airport,” he added.
The strong performance of Changi Airport where passenger throughput rose 5.1% and air freight movements increased 4.5% in April also lends support to SATS performance and long-term outlook, especially as the airport has displayed its capability to handle greater traffic with the opening of Terminal 4 last October.
“Our long-term positive view over SATS’ outlook remains unchanged, which is hinged upon SATS’ diversification strategy in its expansion outside Singapore as well as into non-aviation business segments through its many collaboration with overseas partners,” said Chua, adding that the non-aviation partnership with Wilmar to supply food in China is another plus factor.
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