SATS eyes US$731.1 million in fresh investments over three years
SATS, formerly Singapore Airport Terminal Services, is targetting about S$1 billion (US$731
SATS, formerly Singapore Airport Terminal Services, is targetting about S$1 billion (US$731.1 million) of proposed capital expenditure and investment over the next three years to increase its Asia Pacific aviation presence in catering and air cargo market, to become the leading central kitchen supplier, reports Singapore Business Review.
'This implied S$333 million average per year is around 2.5 times the S$136 million average of the past five years. Management believes that Asian aviation catering market is poised for consolidation driven by airline-affiliated caterer divestments and a growing pool of long shelf life food producers driven by food technology development,' said the Maybank Kim Eng brokerage.
In addition to the planned investments, Maybank KE noted that SATS could cash in from the relatively new central kitchen business in China, after its first non-aviation central kitchen development in Kunshan with the Wilmar Group in early 2017 achieved operating break-even a few quarters ahead of plan.
'SATS is planning to expand its total production capacity in the Beijing-Tianjin-Hebei area from 70,000 meals/day to 200,000 meals/day, whilst its kitchens in the Yangtze River Delta currently have a capacity of 120,000 meals/day,' said the report.
The research firm also noted that SATS TFK, the in-flight catering firm's Japanese subsidiary, saw revenues stabilise from late-2017 and grow at low-to-mid single digits.
'Indication from management of some possible capacity addition suggests that the prior oversupply situation at Haneda and Narita airports is on the mend. We expect TFK's performance should improve further from traffic growth leading to the 2020 Tokyo Summer Olympics,' the report said.