SATS Rides Asian Aviation Growth To Post Higher Profits

Good growth in Asia's aviation sector boosted full-year profits at Changi Airport's biggest ground-handling services provider, SATS.

Earnings for the year to March 31 rose 8.1 percent year on year to $184.8 million, the firm reported yesterday. The earnings growth came on the back of a 7.9 percent jump in full-year turnover to $1.82 billion. Spending during the time grew by 7.3 per cent to $1.63 billion.

SATS, which handles about 80 percent of total flights at Changi, expects growing business at the airport and within the region to provide new opportunities going forward, said its president and chief executive officer Tan Chuan Lye.

The firm operates in 36 airports in 10 countries in Asia and the Middle East.

In the 12 months to March 31, SATS handled more than 41 million passengers at Changi, 8.7 percent more year on year. The number of flights handled jumped 6.8 percent to about 123,000.

Earnings per share for the 12 months was 16.6 cents, rising from 15.4 cents in the preceding financial year. Net asset value per share as of March 31 was $1.26, falling from $1.36 a year ago.

The company's directors have recommended a final dividend of 6 cents per share and a special dividend of 4 cents. Including the interim dividend of 5 cents paid out earlier, the total dividend for the financial year will be 15 cents per share.

SATS had paid total dividends of 26 cents per share for the preceding financial year.

Despite the full-year earnings growth, fourth-quarter net profit fell 7.8 percent to $46.2 million. The decline was due mainly to a provision for impairment of deferred consideration on the sale of Daniels Group, a British food firm.

SATS completed the sale in October 2011.

Fourth-quarter turnover grew 3.6 percent to $449 million.

Earnings per share for the three months was 4.2 cents, dropping from 4.5 cents a year ago.

"SATS' financial year 2013 results were in line with our expectations, coming in within 2 percent of our projections," said OCBC Investment Research. "For financial year 2014, the operating environment remains conducive for SATS and the group should continue to experience broad-based segmental improvements."

OCBC said it is encouraged by the prospects of SATS, but added that valuations remain expensive as many of the positives have already been priced in. It maintained its "hold" rating, but raised its target price to $3.15 from $2.80 previously.

SATS shares gained eight cents or 2.5 percent to $3.22 yesterday.

The results were announced before markets opened.

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