Friday, September 27, 2013
SATS Services: Announced the acquisition of a 100% stake in Singapore Cruise Centre (SCC) from Temasek, for a consideration of $110m (implied 7x P/E). The acquisition is subject to regulatory and shareholders’ approvals, with the approval process estimated to complete by Mar 2014. The transaction is expected to be EPS accretive immediately. Strategically, the acquisition allows SATS to develop its cruise-fly proposition and to expand the cruise business beyond Singapore. On this note, management indicated they would be keen on regional M&A. Growth opportunities are significant, with the Singapore cruise industry still developing – STB projects 65% Singapore cruise pax traffic increase by 2017. Deutsche view the transaction as positive for SATS. This also demonstrates management’s willingness to drive a more aggressive capital structure. CS considers this acquisition as a positive to SATS' medium prospects, providing another growth avenue for the medium term. Expect SATS-Creuers to use its experience and track record as the leading cruise terminal operator in Singapore to bid for more projects or engage in M&A to expand in this space.