SATS

SATS: (S$3.21) Better-than-expected 4QFY15 on good cost control and associates gains
SATS' 4QFY15 results beat estimates as net profit swelled 21.1% y/y to $51.6m, bringing FY15 earnings to $195.7m (+8.5%) or almost 5% above consensus estimates.

For the quarter, revenue slipped 2.2% to $425.1m, mainly caused by lower contribution of $250.9m (-5.8%) from its food solutions segment (-5.8%), which was affected by weaker performance of its Japanese unit TFK, and the divestment of an Australian subsidiary, Urangan Fisheries in Jul '14. This was partially mitigated by higher sales of $173m (+3.5%) from its gateway services.

Operating margin improved to 10.5% (+0.9ppt), benefitting from lower cost of raw materials (-8.5%), depreciation charges (-9.4%) and other costs (-16.5%), while bottom line was further boosted by a 32.3% surge in share of profits from associates/joint ventures to $13.1m.

Balance sheet remains sturdy with net cash position rising from $226.6m to $305.6m, backed by continuous operating cash flow of $263m.

Proposed final DPS of 9¢ takes its FY15 dividend payout to 14¢ (FY14: 13¢).

At current price, SATS is trading at a forward P/E of 18.2x and offers a 4.4% yield, relatively more attractive compared to other aviation support services peers of 21.3x and 4.1%, respectively.