JV with Wilmar signals SATS’ take-off beyond Singapore’s shores: analysts

It’s heading towards China.

While being relatively small, analysts said SATS’ 60-40 joint venture with Wilmar is the first step as the airline services firm continues to broaden its focus outside of Singapore.

According to analysts from UOB Kay Hian, the JV has scope for expansion, as it would be able to tap onto SATS & BRF’s favourable reputations as premier food producer and distributor, while tapping onto Wilmar’s retail distribution network in China.

Meanwhile, UOB Kay Hian adds that the firm is also on an M&A trail, but recent acquisitions can be funded by annual cash generation.

“Over the past seven months, SATS has announced four JVs or acquisitions outside Singapore, which will enhance its reach in new markets as well as provide scale to its Singapore operations,” UOB Kay Hian said.

“They are: a) the increased stake in MacroAsia (their Philippines food solutions associate), b) the acquisition of a 49% stake in Brahim, c) the JV with DFASS, and d) the JV with Wilmar.

These investments amount to S$114m, which can easily be funded by recurring free cash flow (RCF),” they added.