The company’s Langfang kitchen is expected to drive growth.
SATS food solutions revenue is expected to climb 4.1% YoY in FY19 amidst strong growth prospects in its Chinese catering unit, according to UOB Kay Hian.
“China will be a greater growth driver as would rising cruise ship calls in Singapore. SATS and YiHai Kerry, currently caters to over 1m clients and we believe there will be strong demand for safe and high quality food as consumers become discerning,” said UOB analyst K Ajith.
SATS is set to operate a second kitchen in the strategic area of Langfang which borders Tianjin and Beijing, giving access to a wide array of nearby restaurants.
The termination of the MOU with Turkish Airways due to the existence of an incumbent caterer is also of little concern, according to Ajith, as SATS has other growth drivers to propel its way upward.
The company’s profits rose 11.5% YoY to $63.9m in Q1 with the Gateway Services segment rising 3.4% along with the Food Solutions which inched up 2.7%. The earnings boost was able to offset the deconsolidation of SATS HK Limited (SHK) and group expenses which edged up 0.4% to $374.5m.
“Despite the threat of global trade uncertainties potentially affecting cargo volumes, we expect passenger volumes in Asia to grow. At the same time, rapid urbanisation in the region will drive demand for safe, high-quality food, and more cruise ships will be deployed in Southeast Asia to keep pace with burgeoning consumer interest,” the company said in its financial statement.
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