SATS is not done with the acquisition of a controlling stake in Thai frozen food producer Food City.
The in-flight caterer is keen to acquire more assets like Food City, according to Alex Hungate, CEO of SATS.
“We are looking at a pipeline of acquisition opportunities,” he says at the company’s 1QFY2022 results briefing on July 22.
On July 9, the company announced that it completed the acquisition of an 85% stake in Food City.
SATS will configure Food City’s food production facility to produce 90,000 ready-to-eat meals per day.
The latter, according to SATS, will strengthen the company’s food technologies – be it fresh, cook-chill, ambient or frozen – to serve different customer needs.
SATS is also looking to acquire cargo handling assets that operate in large cargo hubs in the region, says Hungate.
See also: SATS reverses from losses to post PATMI of $6.4 mil
Although cargo handling assets have turned out be the “resilient” part of the aviation value chain, the restructuring of airlines amid the aviation crisis could present some opportunities, he explains.
With net cash of $222 million and free cash flow of $7.9 million as at June 30, SATS should not face any problems in financing potential acquisitions ahead.
Better still, if SATS continues to generate cash at that “level” or “better”, the company would be “more ambitious” on potential acquisitions, Hungate says.
Of course, the company would only consider acquisiring assets that are undervalued.
“If we don’t find acquisitions that are of the right value, of course, then we would [use the cash to] pay down more of [our] debt [instead],” he says.
As at June 30, SATS’ total debt declined 17% y-o-y to $726 million.
On July 22, SATS ended up 9 cents or 2.4% at $3.87 with 1.7 million shares changed hands.
Photo: Samuel Isaac Chua/The Edge Singapore
