SATS’ earnings set to take a hit as Changi Airport cargo dwindles

It handles 85% of the airport’s cargo.

The gateway solutions company is once again feeling its dependence on Changi Airport for its earnings. Analysts say gateway services could disappoint in 2QFY16 as cargo volume in Changi declined by 4% in July and August.

According to analysts from UOB Kay Hian, falling regional exports and a disappointing PMI could drag cargo volume for both Singapore and Hong Kong operations to lower-than-expected levels.

Gateway services, which includes volume of cargo handled, accounts for 40% of SATS’ total revenue.

Meanwhile, UOB Kay Hian says SATS could dodge this problem through an increased number of flights handled at Changi.

“However, we note that SATS’ share of flights handled at Changi had declined by 7.4ppt in 1QFY16 to 70.3%,” UOB Kay Hian said.