SATS Limited Financial Performance: Ratio Analysis and Business Review

This report provides a comprehensive financial analysis of SATS Limited, a leading flight catering and ground handling service provider at Singapore Changi Airport. The analysis begins with an overview of SATS's operations, including its history and key personnel. It then delves into ratio analysis, examining profitability, return on equity, and return on capital employed for 2018 and 2019. The report also explores SATS's business sector, focusing on the airline industry in Singapore, and the company's various service categories. Furthermore, the report assesses the economic environment surrounding SATS, referencing the company's sustainability report and key achievements, such as its ranking as a top admired company. The analysis concludes with a recommendation for investors, highlighting the company's potential for future growth and innovation. The report utilizes data from SATS's annual and sustainability reports, as well as articles from The Motley Fool and other sources.

Running Head: SATS LIMITED ANALYSIS 1
SATS LIMITED ANALYSIS

Running Head: SATS LIMITED ANALYSIS
Table of Contents
OVERVIEW................................................................................................................................................3
RATIO ANALYSIS................................................................................................................................3
BUSINESS SECTOR..............................................................................................................................5
ECONOMIC ENVIRONMENT..............................................................................................................6
Achievements..........................................................................................................................................6
CONCLUSION...........................................................................................................................................6
References...................................................................................................................................................8

Running Head: SATS LIMITED ANALYSIS
OVERVIEW
SATS limited which is commonly referred to as SATS is the chief flight catering and the best
ground handler service provider at Singapore Changi Airport. This company came into existence
in the year 1972. The current key people Euleen Goh and Alex Hungate are responsible for the
upgraded services provided by the company. In terms of the figure the share of the SATS is a
roundabout 80%. Apart from this SATS is also involved in providing the food and the gateway
services in Asia. The primary service that has been part of the SATS is the logistics, industrial
catering, chilled and the frozen foods manufacturing. In the gateway services, baggage, ramp
handling, cargo security, handling of the perishables to the cruise, and the management of the
terminal is included. Further the SATS have been listed on the Singapore Stock Exchange in the
year 2000 (The Motley Fool, 2019).
RATIO ANALYSIS
Ratio analysis is a method which is used by most of the corporate organization to fetch the vision
to the company. This indicates how well the company is performing and where it wants to reach
future. In this section, a detailed understanding along with the figures for the two years has been
promoted to discuss the growth and the future possibility of the SATS LIMITED.
Profitability 2018 2018 2019 2019
Net Profit Net income 261465 15% 248408 14%
Net sales 172458
4
182801
9
Return on Equity Net income 261465 16% 248408 15%

Running Head: SATS LIMITED ANALYSIS
Net Equity 163408
1
164923
1
Return on Capital
Employed
Operating profit 226367 11.63
%
247027 12.23
%
Capital Employed 194581
0
201912
1
Operating profit margin Operating profit 226367 13% 247027 14%
Net sales 172458
4
182801
9
The net profitability of the company deems to be almost consistent with the previous year. The
net profit percent tend to be 14 to 15 percent and the sales did increased but at the slow pace. The
return on equity on the other hand is more of the crucial state for the shareholders as the funds
invested by the investors and the return on the invested funds is what they look for. In the case of
the SATS the return on equity was 16% the previous year and this year it turns out to be 15%.
The equity saw a minimal increase whereas the net profits declined over the year. The situation
is not that worse (Zaidi, 2019). The positive situation for the company is the increase in the
operating profit margin by 1%. Finally it can also be observed that the return on the capital
employed is used to understand the relative profitability of the company. The relative share
increased from 11.63% to 12.23%. This in fact is one of the most important and vital sources
from the perspective of the shareholders as the capital invested will determine the return on the
entire capital. The overall position of the company looked smooth and the company shall

Running Head: SATS LIMITED ANALYSIS
maintain the same with the consistency. The investors can invest in the company and can get the
good returns. The overall cash flow position was also nice (SATS A, 2018).
BUSINESS SECTOR
The airline sector or say the aviation market in the Singapore is the key element of the
Singaporean Economy. The ground handling and the other services take up the huge costs at the
Changi Airport which is a major civilian airport in Singapore. SATS Limited is the part of the
Changi Airport and offers a wide variety of the solutions. The business sectors are divided into
the categories as can be seen from the image below. The ground handling and the food services
attracts the customers most of the time (SATS A, 2018).
The competition is between the food solution and gateway services. The graph also suggests that
967.4 and the same is been 973. The gateway services are 725.9 and the same increased to 750.8.
The launch of the Coolport @ Changi Airport tends to be the first center on the airport

Running Head: SATS LIMITED ANALYSIS
maintaining the perishables. It almost took $16 million to build and handles the cargo and the
food catering facility within the free trade zone (SATS , 2018).
ECONOMIC ENVIRONMENT
The economic environment surrounded by the company can be explained in detail by analyzing
the sustainability report. The sustainability report of the SATS LIMITED suggests that over 126
million passengers were served and more than 167 million were served successfully. Apart from
this the electricity consumed by the center saw a 6% decrease in the consumption over the last
two years. Also the recycled rate turned out to be the 4.4% positive over the period of the last
three years. The introduction of the airside driving simulator is the game changer for the
company and lifted it up. The company is economically driven and striving more to complete the
goals by 2030 (The Motley Singapore, 2018).
Achievements
According to the highlights of the achievements, this could be a game changing point in deciding
whether the shareholders and the investors shall invest in the company or will they get the future
returns as well. The achievements includes SATS being ranked as 3rd most admired company in
Singapore, 2nd in terms of the quality of the services and under the scenario of the innovation the
company is ranked on number fourth. The real call for the shareholders is smooth ass the
company is being recognized at the worldwide level (Fang, 2016).
CONCLUSION
From the overall analysis it can be stated that the investors can have a fruitful scenario after
investing in the business, considering the financial as well as the non-financial factor as well.
Moreover the company is also interested in bringing the new technology and the innovation such

Running Head: SATS LIMITED ANALYSIS
as the airside driving simulator which will increase the competition and the overall market share
for the company. This pretty factor would tend to increase the share price and the returns would
be comparatively higher. Hence it is recommended to invest without any doubt.

Running Head: SATS LIMITED ANALYSIS
References
Fang, F.T. ed., (2016) 50 Years of Transportation in Singapore: Achievements and Challenges.
World Scientific.
SATS A, (2018) Annual report [Online] Available from
https://www.sats.com.sg/InvestorRelations/FinancialReporting/AnnualReports1/SATS-Annual-
Report-2018-19-110719.pdf [Accessed on 28th July 2019].
SATS, (2018) Sustainability Report [Online] Available from
https://www.sats.com.sg/InvestorRelations/FinancialReporting/SustainabilityReports/2018-19/
SATS-Sustainability-Report-2018-19-Full-Version.pdf [Accessed on 28th July 2019].
The Motley Fool, (2019) Articles for SATS Ltd (SGX: S58) [Online] Available from
https://www.fool.sg/tickers/sgx-s58/ [Accessed on 28th July 2019].
The Motley Singapore, (2018) SATS Ltd’s Latest Earnings: Growing Pains Amid Macro
Headwinds [Online] Available from https://www.fool.sg/2019/07/24/sats-ltds-latest-earnings-
growing-pains-amid-macro-headwinds/ [Accessed on 28th July 2019].
Zaidi, T., (2019) Examining Tourism Cluster Development in State-led Economies: The Cases of
Dubai and Singapore(Master's thesis).