SG Morning Highlights | Sats Returns to Profitability in Q1 Amid Rising Air Cargo and Inflight Meal Demand

Singapore shares opened lower on Wednesday. The $FTSE Singapore Straits Time Index (.STI.SG)$ dropped 0.15 percent to 3365.18 as at 9:12 am.

$Keppel (BN4.SG)$: Keppel has forged a partnership with the Asian Development Bank (ADB) and Enterprise Singapore (EnterpriseSG) to invest in energy transition and environmental sustainability projects worth around US$800 million across Asia and the Pacific. The projects aim to decarbonize power generation, enhance renewable energy, support electric mobility, construct green buildings, and develop water treatment and waste-to-energy initiatives. These efforts are expected to reduce carbon emissions by over one million tonnes annually. Initially focusing on Southeast Asia, the collaboration will leverage ADB's financial resources, EnterpriseSG's market access support, and Keppel's expertise in sustainable infrastructure to drive regional green growth from 2025 to 2030. The partnership underscores the importance of public-private cooperation in advancing climate solutions, with both ADB and EnterpriseSG committing to support innovation and sustainable development.

$SATS (S58.SG)$: In the first quarter ending June 30, 2024, Sats reported a turnaround with a net profit of $65 million, contrasting sharply with a net loss of $29.9 million in the same period the previous year. The company's revenue climbed 15.5% to $1.4 billion, spurred by increases in both its gateway services and food solutions segments. The gateway services saw a 12% year-on-year growth to $1.1 billion due to higher air cargo volumes from tech shipments, e-commerce demand, and a shift from ocean to air freight amid Red Sea disruptions. The food solutions sector enjoyed a 29.3% jump in revenue to $310.8 million, buoyed by a surge in inflight meal demand. Sats also improved operational efficiency, boosting its operating profit margin from 0.7% to 8.2%, resulting in an operating profit of $112.9 million for the quarter. Looking ahead, Sats anticipates sustaining this positive trend in subsequent quarters.

$Food Empire (F03.SG)$: Food Empire Holdings is set to receive a US$40 million capital boost from Ikhlas Capital, a private equity fund manager, to aid its expansion in South-east Asia and South Asia. The investment will be channeled into a special-purpose vehicle owned by Food Empire, in return for five-year redeemable exchangeable notes carrying an annual interest rate of 5.5%. This strategic move comes after both parties signed a non-binding term sheet in June. The funds from the notes, which are exchangeable into Food Empire's new ordinary shares at S$1.09 each after 24 months or convertible into new shares in the vehicle, will drive capital expenditure and potential mergers and acquisitions. Food Empire has already witnessed significant revenue growth in the target regions in the first half of the year and anticipates this momentum to continue. CEO Sudeep Nair expressed confidence in Ikhlas Capital's ASEAN focus and network to support Food Empire's strategic shift. Before the announcement, Food Empire's shares closed at S$0.97, reflecting a 1% increase.