US asset manager BlackRock is no longer a substantial shareholder of SATS, the provider ground handling services and catering to airlines. And in the wake of the sale, its chairman, CEO and directors have been scooping up shares of the company.
According to a June 1 filing with the Singapore Exchange, BlackRock sold 987,500 shares for $2.63 million, or $2.66 per share. The actual date of the sale was not indicated. Following the sale, BlackRock owns just over 55.8 million shares in the company, or 4.99%, down from 5.08% previously. Under Singapore Exchange’s rules, BlackRock is not obliged to make further disclosure of sales — if any — as it is no longer classified as a substantial shareholder owning 5% or more.
In the wake of BlackRock’s sale, SATS directors, including chairman Euleen Goh and CEO Alexander Hungate, had bought shares from the open market.
First off was independent director Tan Soo Nan. On July 13, he acquired 16,200 shares for $45,896, or $2.83 per share. Tan now holds 30,000 shares directly. When the filing was made for this transaction, Tan used the opportunity to update that he has deemed shares of 4,088 held by his wife as well. She came to hold SATS shares back in Sept 2009, following a dividend-in-species exercise undertaken by Singapore Airlines, which gave out all the SATS shares it held to SIA shareholders as dividend.
On July 14, Hungate, SATS’s CEO since 2014, acquired 36,000 shares for $98,439.84, or $2.73 each. He now holds around 3.36 million shares, equivalent to about 0.3% of the company.
A fortnight later, on July 28, SATS chairman Euleen Goh Yiu Kiang acquired 30,000 shares at $2.76 each. Goh, a veteran banker, now holds 60,274 shares, or around 0.005% of the company. According to a July 29 filing, another independent director, Achal Agarwal, acquired SATS shares from the open market as well. On July 28, he acquired 28,600 shares at $2.75 each, bringing his total stake to 31,900 shares, or 0.003% of the company.
SATS has been hit by the Covid-19 health and economic crisis, given almost all international flights were cancelled.
On July 9, the company reported earnings of $168.4 million for the FY2020 ended March 31, down 32.2% y-o-y. Revenue for FY2020 was up 6.2% y-o-y to $1.9 billion. Growth was partly driven by its so-called “food solutions” business, which produces and sells foodstuffs ranging from chicken nuggets to pizzas via supermarkets and other channels.
The full-year results somewhat covered up the plunge suffered by the company in the most recent 4QFY2020 ended March, when flight cancellations started. With three quarters of SATS’s revenue in 4Q still tied to the aviation industry, earnings fell 88.5% y-o-y to $5.6 million as revenue fell 8.1% y-o-y to $433.1 million. During the quarter, the company enjoyed a $59.8 million reduction in wage bills, thanks to government subsidies.
Given the uncertain outlook, SATS says it will not be paying a final dividend for FY2020. In other words, SATS shareholders will have to make do with the interim dividend of six cents per share that was already paid out. In contrast, a total dividend of 19 cents was paid out in FY2019.
“The operating environment in the next financial year will be challenging for our aviation-related businesses,” warns Hungate in the earnings announcement.
“I would like to recognise our people for the flexibility and resilience that they have shown throughout. We are also grateful for the support that we have received from governments in Singapore and other markets that has helped SATS to retain our deep domain capabilities so that we can ramp up aviation operations with confidence as demand returns,” he adds.
