How SATS Ltd Shares Have Soared 2X Higher Than The Market’s Returns

The Airline caterer SATS Ltd (SGX: S58) delivered total returns of 30% over the period, a performance that is two times better than the STI, which posted 14% in total returns over the same period. SATS is one of the leading Singapore undervalued stock and leading provider in gateway services and food solutions.

Here Multi Management Future Solutions research closer look at the company’s performance over the past three years from different sources. Let's take a look closer look at SATS performance statistics over the past three years-

SATS Lim. has increased its revenue from S$1.69 billion in the financial year ended 31 March 2016 (FY15/16) to S$1.72 billion in FY17/18. The net income increased by a compound annual growth rate (CAGR) of around 9% rising from S$220.6 million to S$261.5 million over the same period. The increase in net income led to its EPS increasing from S$0.20 to $0.23. 

	FY17/18	FY16/17	FY15/16
Cash From Operation	245.5	308.9	273.1
Capital Expenditure	92.8	85.5	51.2
Free Cash Flow	152.7	223.4	221.9
Shares Outstanding	1,125.10	1,20.70	1,11.40
Free Cash Flow Per Share	0.14	0.2	0.2

According to the report of S&P Global Market Intelligence (above table) cash flow performance generated by SATS are stable free cash flow per share for FY15/16 and FY16/17 followed by a drop in FY17/18. The downtrend was due to changes in working capital which dragged its operational cash flow lower, coupled with an increase in capital expenditure. 

SATS Dividend

Now we can analyze the SATS’s dividends per share and payout ratio to see if its dividend sustainable. SATS has grown its dividend per share from S$0.13 in FY13/14 to S$0.18, the average increase is 8.5A% per year. In spite of the increase in dividends, the company’s payout ratio hasn’t changed much moving from around 71% in FY15/16 to about 73% in FY17/18. The stable payout ratio suggests that SATS is not extended itself when it comes to paying out dividends, which should allow the company to sustain its dividend into the future.

SAT’s income, cash-flow, and balance sheets are on strong footing. As such, it should not come as too much of a surprise to see the company outpacing the market two times.