This article is for education purposes only, and not to be taken as advice to buy/sell. Please do your own due diligence before committing to any trade/investment.

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Have you taken a flight recently?

If you have taken a flight into or out of Singapore, you’d have been served by SATS Limited. This is because SATS Limited supports the tourism and logistics industries by providing cargo, catering, distribution, laundry services, and a whole lot more!

With the reopening of borders in many countries, airports all around the world have gotten busier. Does this mean that SATS Limited is growing and worth investing in?

Let’s find out.

 

Brief History of SATS Limited

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SATS Limited is a Singapore company which focused on supporting the nascent aviation industry in Singapore. It was founded in 1972 and was listed on the Singapore Exchange in 2000.

As this young country grew, its aviation needs grew alongside. To better cope with this growth, SATS Limited expanded its network, sought to be more competitive, and ventured into forming strategic partnerships with industry leaders (locally and internationally).

Though SATS Limited was successful, its management had the foresight to diversify its business to provide catering services to institutions.

Some of SATS Limited clients include Cathay Pacific, British Airways, SBS Transit, and Safari House Preschool.

Is SATS Limited financially healthy? Does its forecast look bright?

Let’s find out in the next section as we dive into its business model and financials.

 

Business Model and Financials

Did SATS Limited manage to grow its revenue and net income over the years?

Source: Tradingview

SATS Limited’s revenue had held steady from 2014 to 2017 before experiencing growth in 2018 and 2019. This is a good sign as you’ll want to see steady revenue (at the very least) with some growth.

Expectedly, SATS Limited’s revenue dropped by 50% in 2020 when the pandemic resulted in a global lockdown. Tourism took a big hit, and so did energy prices.

However, both industries have recovered and are experiencing a boom. You can read about this energy stock which was shared last week.

Source: https://www.sats.com.sg/investors/financial-reports

From SATS Limited’s latest financial report, you can see that there’s a pick up in demand for its services.

More flights have been handled (up 39.4%), more meals have been served (up 22.1%), more travelers have been served (up 75.2%), more cargo has been handled (up 55.7%), yet the number of employees hasn’t changed that much.

What can you infer from these statistics provided by SATS Limited?

SATS Limited has been downsizing in recent years and has not ramped up recruitment yet. This suggests that SATS Limited has undergone a transformation and embraced more technology to achieve greater efficiency.

Using the above statistics as a gauge of SATS Limited’s growth, it’s great to know that growth is back and with its growing pool of customers, SATS Limited is one company that I will want to keep a close watch on.

Does its price chart agree with its fundamentals?

 

Technical Analysis on SATS Limited (SGX: S58)

From the chart above, you can see that S58 is in an uptrend in recent months. The share price of S68 is supporting the improving fundamental analysis which was done in the earlier section.

Under the latest candle, you can see a green arrow under it. However, its Trend Impulse Factor bar hasn’t turned dark green. This means that it is premature to invest in S58.

When both the green arrow and dark green bar of its Trend Impulse Factor appear, bullish momentum has returned and is highly likely here to stay. That’d be a more appropriate time to buy S58 for a position trade.

Being in a more volatile environment, it pays to be extra patient in the stock market.

 

Conclusion

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There’s only one direction for the demand for air travel and food catering after 2 forgettable years – up. Though localized lockdowns may happen from time to time, I don’t foresee a global lockdown anytime soon.

Besides, SAT Limited’s revenue and net income have been growing steadily before COVID-19 struck. This is a sign of competent management which is an important factor of consideration.

Lastly, it isn’t the time to position trade the shares of SATS Limited as of yet. Be patient and I believe that you’ll be rewarded handsomely.

After all, the green arrow and Trend Impulse Factor indicators have been tested and proven. They form the TradersGPS (TGPS) system to help you decipher if a stock is a cut above its peers. You won’t have to feel in the dark and make wild guesses.

 

Did You Know?

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