The articles in the blog are intended for informational purposes only, with the aim of encouraging thoughtful discussions. The articles should not be relied upon as financial advice. Please read the important disclaimer at the bottom of the page before proceeding.

Summary of SATS Q1 FY22 Business Updates


SATS reported its Q1 FY22 Business Updates on Thursday, 22 July. SATS is a company that I’ve been following closely, and this article summarises my takeaways from the business updates provided.

Key Operating Statistics

SATS shared a number of key operating statistics, including number of flights handled, meals served, passengers handled, cargo tonnage and total number of employees. These operating statistics include SATS and its subsidiaries, but exclude JVs and associates. In their business updates, SATS had only provided figures for 5 quarters from Q1 FY21 (Apr to June 2020) to the latest quarter Q1 FY22 (Apr to June 2021). Given that Covid-19 had already resulted in a decline in air travel from early 2020, I have added in two more prior quarter’s of SATS’ operating metrics for a more meaningful comparison. Q1 FY21 coincided with the peak of the lockdown in Singapore, while Q4 FY20 was already impacted by a slowdown in aviation volumes. Q3 FY20 would represent pre-Covid operating statistics.

Number of Flights handled is still way below pre-covid levels, even though air travel in other parts of the world have largely recovered. For instance, airlines in the US are actually unable to keep up with demand due to the shortage of workers, leading them to cut flights. SATS’ disadvantage here is that Singapore does not have a domestic air travel market, unlike larger countries. On the positive side, SIA, which is SATS’ largest customer, recorded a 13.7% passenger load factor for April 2021, up from 4.6% in April 2020. SIA aims for 32% of pre pandemic capacity by July 2021.

The cargo segment continues its recovery, and SATS noted that global air cargo volumes has risen beyond pre pandemic levels.

SATS has also drastically reduced their workforce, from around 17,000 employees pre pandemic to around 11,000 employees in the latest quarter. Staff costs remains SATS’ largest operating expense, accounting for around 42% of group expenditure.   

Q1 FY22 Revenue Mix

One of the positives is that SATS has continued to diversify their revenue base beyond the travel sector, with 46% of Q1 FY22 revenue coming from its non travel related businesses. SATS’ non travel businesses include commercial catering, with SATS being one of the caterers for individuals under quarantine in Singapore.

Q1 FY22 Financial Performance

SATS reported Q1 PATMI of $6.4m, profitable for the second consecutive quarter. Govt reliefs continue to provide support to SATS’ financials, as SATS received total govt reliefs of $45.5m for the quarter. Without this, SATS would have reported a PATMI loss.

On an EBITDA basis, SATS has reported four quarters of positive EBITDA since Q2 FY21, recording negative EBITDA of 33.9m only in Q1 FY21, when travel restrictions were the strictest.

Free cash flow, defined as net cash from operating activities less cash capital expenditure, was a positive 7.9m for the quarter.

As of 30 June 2021, SATS had total debts of 726m, a reduction of 147m from the previous quarter as a 150m term loan had been repaid. If rights of use liabilities were excluded, total debt would be 531m instead. Compared to a cash position of 753m, SATS is in a net cash position of 222m. Debt to equity ratio stood at a manageable 34%.


SATS remains my preferred pick for betting on the recovery of the aviation sector, due to its cost structure being more variable as compared to airlines. Airlines face high capex requirements as contracts with manufacturers require them to continue taking delivery of aircraft even when business has slowed. Ongoing maintenance costs and fuel costs are also significant. Whereas SATS has proved to be extremely nimble in cost reductions to minimise losses. Tellingly, despite the huge drop in passenger numbers due to Covid-19, SATS remains in a net cash position with a reasonable gearing ratio of 34%, and has not required any rights issues to raise funding.

Tiger Brokers Promotion

Tiger Brokers is running a promotion (limited to first 6,000 signups), offering new users who make an initial deposit of at least S$2,000 a free Apple share and 180 days of 60 commission free trades. Tiger Brokers Singapore is licensed by MAS and many of my friends have started using the platform - because of its simple user interface and low commission fees. Do not miss out on this great promotion!

If you’re keen to sign up, please click on the following link or use my referral code DUQ8NI to sign up.


Moomoo Promotion

New users with Moomoo (ending 2nd August) also stand to receive 1 free Apple share (upon deposit of 2,700 SGD), 1 free NIO share (upon completion of 5 trades), 180 days of commission free trades and free access to US stock market Level 2 market data. Do not miss out on this too!

If you’re keen to sign up, please click on the following link for my referral to sign up.


Disclaimer: This article is intended for informational and discussion purposes only, and do not constitute financial advice. When in doubt, please contact a licensed financial adviser.

If you enjoy my articles, please 'Like' my Facebook Page at: 

No comments:

Post a Comment