4Q2010-11 vs 4Q2009-10
SATS’ operating revenue increased 29.3% to $504.9 million on the back of higher level of activities and the consolidation of TFK Corporation (TFK). TFK contributed a revenue of $72.6 million. Excluding TFK, the Group’s operating revenue improved 10.7% to $432.3 million. Aviation revenue grew 14.5% to $246.7 million while non-aviation revenue rose 6.6% to $183.3 million. Operating expenses were up 29.8% to $454.7 million, in line with the increase in activity levels and the inclusion of TFK. As a result, SATS earned an operating profit of $50.2 million, 24.6% higher than a year ago. Excluding exceptional items of $2.7 million in M&A costs in 4Q2010-11 and $1.5 million jobs credit received in 4Q2009-10, SATS’ underlying operating profit would be $52.9 million, up 36.3% year-on-year.
Share of profits of associated/JV companies grew 17.7% to $15.3 million due mainly to the maiden contribution of $6.4 million by Air India SATS Airport Services (AISATS). Consequently, SATS’ pre-tax profit rose 23.5% to $65.2 million and its profit attributable to equity holders was 9% higher at $50.7 million. Excluding the exceptional items, SATS’ underlying net profit would have increased 18.7% to $53.4 million.
sgxstockpicker says: SATS is a good company but at present levels of 16x PE and 2x book value, upside is capped to the market. There are no catalyst for share price appreciation in the short term. Long term, look to hold on to SATS for its dividend yield.