1HFY22 results – Tracking well with expectations  

  • 2QFY22 core PATMI of S$6.8m (vs core LATMI of S$1.6m and +6.3% q-o-q). 1HFY22 core PATMI of S$13.2m met our expectations.
  • Revenue was up by 27.2% y-o-y and 6.-6% q-o-q to S$293.9m in 2QFY22, driven by an improvement in non-travel revenue (+8.1% q-o-q) and recovery in travel revenue (+5.9% q-o-q).
  • EBIT margin narrowed slightly to 0.2% in 2QFY22, from 1.3% in the previous quarter, primarily due to lower quantum of government grants. 
  • Contribution from associates and JVs turned positive in 2QFY22 at S$2.1m, up from a loss of S$12.8m in 2QFY21 and S$1.2m in 1QFY22.
  • We currently have a BUY call and TP of S$4.50 on the stock.


  • Number of flights handled increased by 2.7% q-o-q to around 15.0% of pre-crisis levels. 
  • Number of gross meals produced increased by 4.1% q-o-q in 2QFY22, driven by food sales via its non-aviation channels as aviation meals catered were essentially flat q-o-q.
  • Non-travel revenue registered faster growth than travel revenue, but the situation should eventually reverse going forward with the launch of more VTLs and resumption of flight activity in the region.
  • Core LATMI (excluding government grants) would have come in at S$30.1m in 2QFY22, slightly lower than S$35.6m in 1QFY22.
  • SATS received about S$86m worth of government support in 1HFY22, and should receive about S$40-50m in 2HFY22.
  • The company declared it plans to invest S$1bn in capex and M&A over the next three years to drive earnings growth, which should be manageable given its healthy balance sheet with a net cash position of S$147m and low debt/equity ratio of 0.3x as of end-2QFY22.
  • FY25 revenue target of S$3bn, represents a commendable revenue CAGR of 8.6% between FY19-25. Non-travel revenue is expected to form 35% of total revenue in FY25, up from 14% in FY19. 

Our thoughts

  • SATS’s 2QFY22 results was largely in line with our expectations with 1HFY22 core PATMI representing 33% of our full-year projection, as we anticipate sustained recovery in its aviation business in 2HFY22F.
  • Recently implemented and newly established VTLs are expected to progressively boost traffic volumes at Changi; general easing of international travel restrictions in Asia also bodes well for SATS’s international operations.
  • Cargo revenue is projected to continue growing at a healthy CAGR going forward on e-commerce and cold chain tailwinds.
  • Anticipate continued growth in SATS’s non-travel revenue given its efforts on channel expansion into new regional markets.
  • Expect more acquisitions in the short to medium term to stimulate stronger earnings momentum.