Fair value estimate decreases from SGD4.95 to SGD4.84. BUY.

SATS Ltd (SATS SP) Aided by non aviation revenue

• FY21 net loss of SGD78.9m
• Aviation revenue fell 66.5% YoY
• Non-aviation segment contributed 44% of FY21 revenue

FY21 result met expectations
SATS’s FY21 revenue fell 50.0% YoY to SGD970m, pulled down by lower Food Solutions (-46.4% YoY) and Gateway Services revenue (-55.1% YoY) as a result of persistent headwinds from Covid-19. Share of associates/JVs were similarly impacted which recorded a loss of SGD48.0m as compared to a gain of SGD11.8m in FY20. A total of SGD109m of impairment charges and credit loss provisions were made on investments and associates/JVs. All-in, FY21 net loss attributable to shareholders was SGD78.9m, as compared to PATMI of SGD168.4m in FY20, in-line with our expectations.

Cargo volume recovered t o ~90% of pre Covid 19 levels
On a QoQ basis, SATS’s revenue rose 11.0% QoQ to SGD278.5m in 4QFY21, driven by strong cargo volume, partially offset by lower passenger and flights handled (-9.1%/-8.2% QoQ). 4QFY21 bottomline turned to a profit of SGD0.8m, after three consecutive quarters of losses, thanks to SGD51.1m of government relief. Management mentioned that SATS’s cargo volume has recovered to ~90% of pre-Covid-19 levels, driven by demand from e-Commerce, temperature sensitive supplies such as vaccines and perishables. Based on IATA’s latest forecast, cargo volume is expected to grow 13.1% YoY and exceed 2019 levels by 2.8% in 2021.

No dividend was declared

No dividend was declared as compared to 6 S-cents last year to conserve cash and more jobs. Management guided that SATS needs to be profitable and generate positive cash flow without government relief before they would consider resuming dividend distribution. SATS received SGD271.8m of government grants and reliefs in FY21 and will receive another six months of JSS support from Apr to Sep 2021 which SATS will recognise over FY22. After adjustments, our fair value estimate decreases from SGD4.95 to SGD4.84. BUY. (Chu Peng)