SATS

SATS: 4QFYMar13 results slightly below. Revenue at $449m, +3.6% yoy, driven by growth in both Gateway Services (+7.7%) and Food Solutions (+1.4%). Increased flights and higher meal volumes helped offset lower contribution from TFK due to the weaker yen. Net profit was $46.2m, -7.8%, mainly due to a $16.8m impairment of the deferred consideration due on the sale of the Daniels group that was completed in Oct ’11. The receivable is contingent on Daniels’ performance over the two years to Mar ’13, which did not meet expectations. Adjusting for Daniels and other exceptionals, core net profit would be $63m, +32% yoy. On outlook, mgt believes the continued growth of pax traffic at Changi Airport and the robust intra-Asia traffic will provide opportunities for the group’s gateway and food businesses. But expects air freight demand to remain weak. Adds continuing manpower policies in Singapore and their impact on operating costs remain major challenges for SATS. The group continues to seek new growth areas by expanding its offerings and regional footprint. Mgt proposes a final dividend of 6 cts and special dividend of 4 cts. Total FY13 div amounts to $0.15/sh (90% payout ratio), translates to a yield of 4.8%, but is down from the $0.26/sh distributed for FY12. At last close at $3.14, SATS trades at 18.9x P/E, vs peer SIE at 21.3x.