Sats sets five-year revenue target of $8 billion, delivers strong second-quarter results

SINGAPORE - Sats is aiming for revenue growth of more than 50 per cent in the next five years, as demand rises for its airport support and ground-handling services.

The Singapore-listed ground handler and in-flight caterer has set a target of achieving over $8 billion in revenue by 2029, according to its Capital Markets Day presentation filed with the Singapore Exchange (SGX) on Nov 8.

It will also aim to achieve core profits of at least 20 per cent of revenue in the same period, and return on equity of 15 per cent or more.

Sats said that 75 per cent of the $8 billion revenue target will be contributed by its gateway services arm, which provides passenger and aircraft handling and baggage, security and cargo-handling services.

The remaining 25 per cent of revenue will come from Sats’ food solutions arm, which caters food for airlines and other institutions.

The higher growth projections, if attained, could provide further support for Sats’ shares, which have risen by 40 per cent since the start of the year.

In October, Sats was also among the highest-performing stocks on the SGX. Its shares closed on Nov 8 at $3.85, down 3.3 per cent for the day.

Sats on Nov 7 announced a strong set of results for the second quarter of its financial year, which ends on March 31, 2025.

Profit for the quarter ended Sept 30 stood at $69.7 million, soaring 214 per cent from the same quarter a year ago.

This came on the back of a 14.1 per cent year-on-year increase in revenue to $1.5 billion for the same period.

For the first half of the 2025 financial year, Sats locked in a profit of $134.7 million, compared with a loss of $7.8 million in the same period last year.

Revenue for the period came in at $2.8 billion, which is up 14.8 per cent year on year.

Sats said the jump in numbers was due to increasing e-commerce demand and continued disruption to sea freight from the Red Sea crisis, which led to higher business volume and rate increases from customers at the gateway services division. 

The food solutions business also grew, due to higher demand for in-flight meals as the travel industry recovered.

Consequently, the company declared an interim dividend of 1.5 cents per share, payable on Dec 6.

It did not propose any dividends in the corresponding period a year ago.

Sats noted that it expects dividends to rise in tandem with profits, but payouts could be tapered as it continues to pare debt.

Its debt levels stood at around $4 billion as at end-September, comprising $2.6 billion of borrowings and $1.3 billion in lease liabilities.

The company had taken on large amounts of debt in 2022 to fund the $1.8 billion acquisition of its much larger global rival Worldwide Flight Services.

The deal included a $700 million loan, and $800 million from a renounceable rights issue, which significantly diluted its shares.

Now the world’s biggest air cargo handler and ground services provider, Sats added that it expects the positive momentum seen so far to continue into the next quarter as demand for travel and cargo reaches its seasonal year-end peak.

Correction note: The story has been edited to clarify the services provided by the Sats gateway services division.