OCBC Investment Research
Date of Report: 21 August 2025
SATS Ltd: Resilient Growth, Global Ambitions, and the Road to Sustainable Value Creation
Executive Summary: SATS Maintains Momentum Amid Global Uncertainty
SATS Ltd, Singapore’s leading provider of gateway services and food solutions, continues its upward trajectory, posting robust first quarter FY26 results. The company’s strategic integration of Worldwide Flight Services (WFS) is unlocking value, positioning SATS to not only weather global headwinds but also to capture long-term growth opportunities. With management targeting over SGD 8 billion in revenue by FY29 and ambitious margin and return metrics, SATS is firmly set on a path of sustainable expansion.
Investment Thesis: A Global Gateway and Food Solutions Powerhouse
SATS stands as a global leader in gateway services and Asia’s premier food solutions provider. Benefiting from the steady recovery in global aviation and cargo volumes, SATS is leveraging its expanded network—especially through the integration of WFS—to optimize costs and drive synergies. The company’s long-term strategy is centered on:
- Strengthening leadership in the global cargo market by increasing wallet share among key customers and capturing incremental value across the supply chain.
- Maintaining dominance in aviation catering in Asia while expanding into high-value ready-to-eat meal segments in core markets.
SATS aims to surpass SGD 8 billion in group revenue by FY29, targeting an EBITDA margin of at least 20% and a return on equity (ROE) of at least 15%. The company’s outlook hinges on management’s ability to deliver amid global trade fluctuations and evolving industry dynamics.
1QFY26 Results: Solid Performance Underpinned by Profitable Growth
SATS delivered a resilient first quarter for FY26, aligning with expectations and demonstrating the company’s ability to adapt to volatile market conditions.
| Metric |
1QFY26 |
1QFY25 |
YoY Change |
| Revenue (SGD m) |
1,506.3 |
1,370.4 |
+9.9% |
| Expenditure (SGD m) |
1,232.6 |
1,121.3 |
+9.9% |
| EBITDA (SGD m) |
273.8 |
249.1 |
+9.9% |
| Operating Profit (SGD m) |
125.2 |
112.9 |
+10.9% |
| Share of Assoc. & JVs (SGD m) |
33.0 |
35.6 |
-7.1% |
| PATMI (SGD m) |
70.9 |
65.0 |
+9.1% |
- Gateway Services: Revenue rose 11.2% YoY to SGD 1.2b. Cargo volumes processed grew 10.4% to 2.4 million tonnes, outpacing the industry and reflecting SATS’ ability to secure new customers and expand wallet share. Flights handled grew 2.6% YoY to 158,800.
- Food Solutions: Revenue increased by 5.6% YoY to SGD 328.3m, despite a 1.1% decline in gross meals produced (26.1 million meals). This drop was attributed to the consolidation of food production in China, streamlining operations into a central kitchen in Tianjin.
- Profitability: Operating profit grew 10.9% YoY to SGD 125.2m, with EBIT margin improving by 0.1 percentage points to 8.3%. Share of associates and joint ventures dipped due to a one-off gain in the prior year, but underlying performance remained strong.
- Free Cash Flow: Impacted by a delayed customer payment (since resolved), management expects this to be a non-recurring event.
Management Outlook and Strategic Focus
SATS management remains confident in its ability to outperform the broader industry, citing the advantages brought by the WFS acquisition. The company’s diversified global footprint allows for flexible routing and responsiveness to shifting trade flows. Key strategic priorities include:
- Expanding the customer base and wallet share in global cargo.
- Deepening penetration in high-value ready-to-eat meal segments.
- Continued focus on cost optimization and network efficiency.
Valuation, Financial Performance, and Peer Comparison
SATS’s fair value is maintained at SGD 3.73 per share, reflecting confidence in profitable growth and margin expansion, supported by strong operating performance and the successful WFS integration.
| Company |
P/E FY26E |
P/E FY27E |
P/B FY26E |
P/B FY27E |
EV/EBITDA FY26E |
EV/EBITDA FY27E |
Dividend Yield FY26E (%) |
Dividend Yield FY27E (%) |
ROE FY26E (%) |
ROE FY27E (%) |
| SATS LTD |
18.0 |
15.5 |
1.7 |
1.6 |
8.0 |
7.6 |
2.0 |
2.4 |
9.9 |
10.8 |
| Airports of Thailand (AOT.BK) |
28.9 |
29.9 |
3.6 |
3.4 |
15.1 |
15.0 |
2.0 |
2.0 |
14.6 |
13.5 |
| Japan Airport Terminal (9706.T) |
20.5 |
19.5 |
2.4 |
2.2 |
8.6 |
8.2 |
1.7 |
1.8 |
12.4 |
12.2 |
| Malaysia Airports Holdings (MAHB.KL) |
N.A |
N.A |
N.A |
N.A |
N.A |
N.A |
N.A |
N.A |
N.A |
N.A |
| Beijing Capital Intl Airport (0694.HK) |
139.9 |
33.4 |
0.9 |
0.9 |
12.0 |
10.1 |
0.0 |
0.0 |
0.1 |
3.2 |
Key Financials for SATS (FY25-FY27E)
| Metric |
FY25 |
FY26E |
FY27E |
| Revenue (SGD m) |
5,821 |
5,694 |
5,970 |
| EBITDA (SGD m) |
1,036 |
1,063 |
1,142 |
| EBIT (SGD m) |
476 |
479 |
531 |
| PATMI (SGD m) |
244 |
262 |
305 |
| DPS (S cents) |
5.0 |
5.2 |
6.0 |
| EBITDA Margin (%) |
17.8 |
18.7 |
19.1 |
| EBIT Margin (%) |
8.2 |
8.4 |
8.9 |
| PATMI Margin (%) |
4.2 |
4.6 |
5.1 |
| Dividend Yield (%) |
1.6 |
1.6 |
1.9 |
Company Overview: SATS’s Expanding Global Footprint
Founded over 70 years ago, SATS is the region’s leading provider of gateway services and food solutions. The company serves not only the aviation sector but also hospitality, healthcare, freight, logistics, and government agencies. SATS’s business is driven by two core segments:
- Food Solutions: Includes airline catering, food distribution and logistics, industrial catering, and chilled/frozen food manufacturing, as well as linen and laundry services. The food solutions arm now extends well beyond aviation, reaching healthcare and hospitality clients across the Asia Pacific.
- Gateway Services: Covers airfreight, baggage and ramp handling, passenger services, aviation security, cargo, warehousing, perishables handling, and cruise terminal management. SATS is the leading ground handler and in-flight caterer at Changi International Airport, with a presence in over 40 airports across Asia and management of the Marina Bay Cruise Centre.
| Segment |
FY25 Revenue Contribution |
| Gateway Services |
77% |
| Food Solutions |
23% |
| Others |
0% |
| Geography |
FY25 Revenue Contribution |
| Singapore |
35% |
| APAC (ex-Singapore) |
11% |
| EMEA |
19% |
| Americas |
35% |
Comprehensive Financial Performance (FY21-FY25)
| Metric |
FY2021 |
FY2022 |
FY2023 |
FY2024 |
FY2025 |
| Revenue (SGD m) |
970.0 |
1,176.8 |
1,758.3 |
5,149.6 |
5,821.1 |
| Gross Profit (SGD m) |
252.7 |
241.2 |
405.9 |
1,583.2 |
1,760.6 |
| Operating Income (SGD m) |
-102.9 |
-30.7 |
-92.7 |
242.7 |
471.8 |
| Net Income (SGD m) |
-78.9 |
20.4 |
-26.5 |
56.4 |
243.8 |
| Operating Margin (%) |
-10.61 |
-2.61 |
-5.27 |
4.71 |
8.10 |
| Net Income Margin (%) |
-8.14 |
1.73 |
-1.51 |
1.03 |
4.19 |
| Return on Equity (%) |
-4.99 |
1.29 |
-1.35 |
2.26 |
9.83 |
ESG Updates: Stronger Commitments, Clear Targets
SATS’s ESG rating was upgraded in March 2024, primarily due to enhancements in raw material sourcing and food safety management certifications. These improvements reduce exposure to liability from food quality lapses. SATS’s governance and health and safety programs match global peers, but business ethics and biodiversity/community impact assessments are areas for further progress.
At Capital Markets Day 2024, SATS committed to:
- Reduce Scope 1 and 2 emissions by 50% by 2030
- Achieve carbon neutrality by 2040
- Reach net zero by 2050
Potential Catalysts and Investment Risks
Key Catalysts:
- Stronger-than-expected cash flow due to revenue momentum or cost optimization
- Growth in associates and JV earnings
- Resumption of dividends
Key Risks:
- Macroeconomic headwinds or recession dampening travel demand
- Persistent inflation impacting margins
- Execution risks, especially in food safety
- Sudden trade policy changes and deteriorating travel sentiment
Conclusion: SATS Positioned for Sustainable Leadership
SATS’s performance in FY26 to date underscores its resilience and operational excellence. Strategic integration of WFS, a broadening of high-value customer segments, and ongoing cost and network optimizations support a positive outlook. With clear financial and ESG targets, SATS is well-placed to deliver value for shareholders and maintain its leadership in both gateway services and food solutions across Asia and globally.
About SATS Ltd
SATS is the region’s leading provider of gateway and food solutions, with over 70 years of expertise and an expanding global presence. The company serves aviation, hospitality, healthcare, freight, logistics, and government sectors, with core businesses in food solutions (airline catering, food logistics, industrial catering, and more) and gateway services (airfreight, baggage handling, security, cruise terminal management, etc.). SATS continues to actively pursue partnerships and diversification beyond aviation and Singapore, cementing its role as a global industry leader.
