CGS International
Date of Report: September 24, 2025
SATS Ltd: Navigating Trade Redirection, Growth Opportunities, and Resilience in Global Air Cargo
Executive Summary: Why SATS Ltd Stands Out in a Shifting Air Cargo Landscape
SATS Ltd, a leading gateway and food solutions provider across the aviation sector, is demonstrating robust growth in the face of global trade shifts, regulatory changes, and macroeconomic uncertainties. This research dives deep into SATS’s latest financials, operational performance, geographic reach, ESG credentials, and competitive positioning, showing why the company remains a high-conviction pick. CGS International reiterates its “Add” rating with a DCF-based target price of S\$3.83, representing a 12.8% upside from the current price of S\$3.39.
US De Minimis Exemption Removal: Minimal Disruption, Major Opportunity for SATS
On August 29, 2025, the US removed its De Minimis exemption, ending duty- and tax-free entry for parcels under US\$800. While this raised concerns over a potential slowdown in US-bound air cargo—especially for e-commerce giants like Shein and Temu—SATS has proven resilient. E-commerce flows have rapidly pivoted toward Europe, the Middle East, and Africa (EMEA), cushioning global air cargo demand.
Key industry insights:
- Global air cargo demand (measured by cargo tonne-kilometres, CTK) surged 5.5% Year-on-Year (YoY) in July 2025, with only Asia-North America showing a 1.0% YoY decline.
- E-commerce trade redirection, not disruption, is driving new growth corridors, particularly benefiting operators with global reach like SATS.
SATS’s Competitive Edge: Global Diversification and EMEA Growth
SATS operates in 125 locations worldwide, including 55 in EMEA and 53 in the US. This geographic diversity has shielded the company from regional downturns and positioned it to capitalize on shifting trade flows.
Key operational highlights from 1QFY3/26:
- EMEA cargo/mail processed increased by 21.1% YoY and 7.1% Quarter-on-Quarter (QoQ).
- Americas saw marginal YoY growth (+1.0%) and a slight QoQ dip (-0.5%).
- SATS’s cargo tonnage handled has outpaced global air cargo demand for seven consecutive quarters, with an average 5.8 percentage point lead.
Financial Performance & Outlook: Resilient Growth, Cost Efficiency, and Margin Expansion
CGS International maintains conservative FY26F-28F earnings per share forecasts, mindful of macroeconomic sensitivities. Still, net profit CAGR of approximately 15.4% is expected between FY26F-28F. Re-rating catalysts include strong operating cash flow, debt reduction, and ongoing outperformance in cargo handling.
Potential risks:
- Margin compression from weaker operating leverage if cargo volumes soften.
- Aviation industry slowdown from a global economic downturn.
Financial Summary Table
| Metric |
Mar-24A |
Mar-25A |
Mar-26F |
Mar-27F |
Mar-28F |
| Revenue (S\$m) |
5,150 |
5,821 |
6,114 |
6,412 |
6,886 |
| Operating EBITDA (S\$m) |
781 |
1,036 |
1,103 |
1,181 |
1,276 |
| Net Profit (S\$m) |
56.4 |
243.8 |
265.9 |
316.4 |
375.5 |
| Core EPS (S\$) |
0.05 |
0.16 |
0.18 |
0.21 |
0.25 |
| Core EPS Growth |
– |
211% |
9% |
19% |
19% |
| FD Core P/E (x) |
64.41 |
20.86 |
19.18 |
16.12 |
13.58 |
| DPS (S\$) |
0.015 |
0.050 |
0.055 |
0.065 |
0.070 |
| Dividend Yield (%) |
0.44 |
1.47 |
1.62 |
1.92 |
2.06 |
Operational Metrics: Outperformance Across Key Indicators
| Metric |
1QFY26 |
1QFY25 |
YoY % Change |
4QFY25 |
QoQ % Change |
| Flights Handled (‘000) |
158.8 |
154.8 |
+2.6% |
157.8 |
+0.6% |
| Cargo Handled (‘000 tonnes) |
2,379.3 |
2,155.1 |
+10.4% |
2,273.6 |
+4.7% |
| Gross Meals (m) |
26.1 |
26.4 |
-1.1% |
26.1 |
-0.3% |
| Aviation Meals |
16.4 |
15.5 |
+5.6% |
16.4 |
-0.2% |
| Non-Aviation Meals |
9.7 |
10.9 |
-10.6% |
9.8 |
-0.4% |
Key Geographical Locations: A Truly Global Footprint
SATS’s cargo handling and ground services span 125 locations across Asia-Pacific, EMEA, and the Americas. Key locations include major air hubs in Belgium, France, Germany, India, Ireland, Italy, the Netherlands, Oman, Saudi Arabia, South Africa, Spain, Sweden, the UK, the US, Vietnam, Greater China, Indonesia, Malaysia, and Thailand. This global spread underpins SATS’s ability to capture trade redirection and maintain operational resilience.
Margin Drivers: Revenue Growth and Food Solutions Efficiency
SATS is poised for further revenue expansion, especially within its gateway services. The company’s FY26F gateway services revenue estimate of S\$4.58 billion conservatively assumes a 2.5% YoY increase in cargo volume and a 2.0% YoY rise in flights handled. Actual 1QFY26 results already show greater momentum, with a 10.4% YoY increase in cargo and 2.6% in flights handled.
Additional margin upside is expected from cost efficiencies in the food solutions segment. The expansion of Thailand’s central kitchen—from 18,000 to 108,000 meals per day (completion by end-2025)—will allow SATS to centralize aviation meal production in Southeast Asia, freeing up capacity at other facilities for further growth.
Cash Flow and Balance Sheet Strength
| Metric |
Mar-24A |
Mar-25A |
Mar-26F |
Mar-27F |
Mar-28F |
| Total Cash and Equivalents (S\$m) |
659 |
694 |
710 |
733 |
867 |
| Net Gearing (%) |
80.6 |
66.6 |
54.8 |
43.7 |
30.6 |
| Operating EBITDA Margin (%) |
15.2 |
17.8 |
18.0 |
18.4 |
18.5 |
Peer Comparison: SATS vs. Airports of Thailand (AOT)
| Company |
Ticker |
Price (Local) |
Target Price (Local) |
Market Cap (US\$m) |
FD Core P/E CY25F |
FD Core P/E CY26F |
Div Yield CY25F |
Div Yield CY26F |
Net Gearing CY25F |
Recur. ROE CY25F |
Recur. ROE CY26F |
| SATS Ltd |
SATS SP |
3.39 |
3.83 |
3,926 |
19.6 |
16.8 |
1.6% |
1.8% |
57.5% |
9.7% |
10.6% |
| Airports of Thailand |
AOT TB |
39.75 |
25.00 |
17,723 |
31.0 |
31.4 |
1.9% |
1.9% |
-19.4% |
14.1% |
13.3% |
ESG Performance: Strong Governance and Sustainability Focus
SATS scored C+ in the LSEG ESG combined score for FY25, with breakdowns as follows: Environmental (C), Social (C), and Governance (B). The company ranks second among peers in ESG and is a leader in Governance. SATS’s environmental initiatives—energy saving, smart infrastructure, renewable energy, waste reduction, and skill development—are expected to support future margin expansion.
ESG Pillar Highlights:
- Environmental: Initiative on renewable energy, EVs, sustainable packaging, and alternative proteins.
- Social: Workforce score of C+ in FY24, reflecting improvement post-pandemic despite industry-wide turnover challenges. Ongoing efforts in employee training are expected to boost productivity and satisfaction.
- Governance: Strong shareholder rights, equal voting, and improved executive pay transparency. Recent auditor appointment further strengthens governance.
Shareholder Structure and Market Data
- Temasek Holdings remains a major shareholder with 40.4% stake.
- Free float: 59.5%
- Market cap: S\$5,056m (US\$3,926m)
- Average daily turnover: S\$13.97m (US\$10.89m)
- Current shares outstanding: 1,487 million
Investment Thesis: Why SATS is a Top Pick for Investors
CGS International’s “Add” rating is underpinned by SATS’s proven ability to capture growth from the redirection of global trade, operational efficiency, a diversified global footprint, and robust financials. SATS’s outperformance versus industry growth, cost optimization initiatives, and strengthening ESG profile make it a compelling investment for those seeking exposure to global air cargo and aviation services.
Conclusion
Despite external regulatory and macroeconomic headwinds, SATS Ltd has successfully navigated industry challenges by leveraging its global network, driving operational efficiencies, and maintaining financial discipline. With attractive earnings growth potential, a strengthening balance sheet, and a clear sustainability agenda, SATS is well-positioned for continued outperformance in the global aviation value chain. Investors seeking resilient growth and international diversification should keep SATS Ltd firmly on their radar.
