What's the outlook for SATS following fourth quarter loss?

SATS’ share price is down as much as 6.5% this week, on the back of Q4 net losses and lower dividends for FY2019/2020.

SATS stocks down by 6.5% this week

Singapore aviation service provider SATS' share price is down by as much as 6.5% this week, following the company’s fourth quarter earnings report for the 2020 financial year.

Last Thursday 09 July 2020, the Singapore Exchange-listed company reported a net loss of S$6.3 million in Q4 FY2020, as compared to a net profit of S$49.9 million in the same period a year prior. This is below SATS’ initial earnings projection of S$15 million to S$19 million in net profit.

Following that, SATS stocks opened nearly 3% lower on Monday 13 July at S$2.81 a share. As at 16:00 SGT on Tuesday 14 July, share price has fallen further to S$2.72 per share.

Despite the price decline, IG’s market analysis show that ‘buys’ form 67% of all trades on the SATS counter so far this week. Additionally, 98% of IG client accounts with open positions in this market also expect the price to rise.

Read more: Where do analysts see SATS share price going next? ​

SATS’ net profit declined 112.6% in the fourth quarter

Last week, SATS reported that group revenue for the quarter ending 31 March 2020 decreased S$38.4 million, or 8.1% year-on-year, to S$433.1 million.

Group expenditure for the quarter dropped S$29.1 million, or 6.9%, to S$391.6 million, compared to the previous corresponding quarter.

Group operating profit dipped S$9.3 million, or 18.3%, to S$41.5 million, compared to the same quarter last year, primarily attributable to the sharp decline in the group’s aviation revenue.

Consequently, the group recorded a net loss of S$6.3 million in Q4, a year-on-year decline of S$56.2 million, or 112.6%. The underlying net profit of S$5.6 million was S$43.1 million or 88.5% lower year-on-year.

Across the full financial year, group net profit attributable to owners of the company declined S$80 million (32.2%) to S$168.4 million. The underlying net profit was S$180.3 million, a decrease of S$61.1 million (25.3%) year-on-year.

The group said that its performance for the quarter was impacted by the Covid-19 pandemic across the region, which led to a significant drop in global demand for air travel. This had in turn created substantial adverse impact on revenue and profitability, it added.

Are you looking to trade SATS shares without having to buy and sell the underlying asset? IG’s CFD option allows you to do just that.

SATS caps full-year dividends at S$0.06

In light of the ‘significant uncertainties’ in the road ahead, the ground handling operator’s Board of Directors believe that it would be prudent not to pay a final dividend for FY2019/2020.

It said: ‘This will allow the company to preserve more jobs and capabilities to support our customers as aviation volumes resume, and to pursue opportunities outside of aviation.’

As such, the full-year total dividend sum tallied at S$0.06 per share. This is down from FY2018/2019’s final dividend amount of S$0.19.

Alex Hungate, President and Chief Executive Officer of SATS, remarked in the earnings release that the operating environment in the next financial year ‘will be challenging’ for the group’s aviation related businesses.

Analysts raise SATS share price targets

DBS equity researchers have maintained a ‘hold’ rating on the SATS stock and raised their share price estimates to S$2.83, up from S$2.64 per share previously.

They took this optimistic view as they found SATS’ Q4 earnings to be ‘non-event’, as the ‘full-blown impact of poor throughput at Changi was felt in 1Q21 (April to June 2020) due to regional lockdowns’.

They also increased their FY2021-FY2022 earnings estimates by 6% to 8%, in line with SATS management’s latest improved profit guidance for the first quarter of FY2021.

On the other hand, CIMB analysts have changed their rating on the stock to a ‘reduce’ on concerns regarding a resurgence of severe global lockdowns as Covid-19 cases begin to surge again.

However, they increased their SATS share price target to S$2.80 per share (from S$2.56), as they believe that SATS’ capacity will ‘inevitably improve as travel gradually recovers’. Nevertheless, they cautioned that at 30x FY21F price-to-earnings ratio, SATS’ stock valuation is ahead of its fundamentals.

How to trade Singapore stocks with IG

Are you feeling bullish or bearish on SATS Ltd and other Straits Times Index (STI Index) stocks? Either way you can buy (long) or sell (short) the asset using derivatives like CFDs offered on IG's industry-leading trading platform in a few easy steps:

  • Create a live or demo IG Trading Account, or log in to your existing account
  • Enter <SATS Ltd> in the search bar and select the instrument
  • Choose your position size
  • Click on ‘buy’ or ‘sell’ in the deal ticket
  • Confirm the trade

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

React to global volatility

Market volatility continues as coronavirus concerns amplify. Trade with IG and take advantage of:

  • Tight spreads – from just 1 point on major indices, and 2.8 on US crude
  • Guaranteed stops – they’re free to use, and only incur a fee when triggered
  • Round-the-clock assistance – our highly skilled team are available when you need support

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.


Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.