Although Sats moved swiftly to clarify a week later that the buyout would be financed through a mix of an $800 million rights issue, a $700 million term loan and $320 million in cash, the acquisition was still met with scepticism.
The steep price tag raised immediate concerns. The WFS sale cost $1.7 billion, which was 56% of the market capitalisation of Sats in 2022. The company, which had seen the change of hands across three different private equity (PE) firms over the last 16 years, had an enterprise value of EUR2.25 billion, with an EV/Ebitda multiple of 9.7 times.
In comparison, the last PE firm acquired WFS when its enterprise value was EUR1.15 billion, and EV/Ebitda was estimated to be around 5.5 times. Investors were quick to point out that Sats would be paying out more than what WFS’s previous owners did, particularly at a time when the company was barely recovering from the pandemic, which had hurt the entire global aviation industry and its various supporting organisations.
At the time, analysts like Roy Chen from UOB Kay Hian placed their recommendation for Sats under review, wary of the potential impact a global recession could have on the air cargo business in 2022. Chen then noted that “the acquisition valuation is not a bargain but within a reasonable range.”
Some feared the acquisition would lead to a dilutive capital call. Accordingly, OCBC Investment Research’s Chu Peng warned that a potential rights issue would continue to hang over the stock, weighing on Sats’ near-term share price performance.
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Sats, long regarded as a blue-chip dividend-paying stock on the Singapore Exchange (SGX), had to pause rewarding investors while recovering from acquisition losses. Investors were displeased at losing the healthy average dividend payout of 70% to 80% of earnings paid over the past decade. From FY2020/2021 to FY2023/2024, Sats declared no dividends.
Yet Sats’ CEO Kerry Mok, who assumed the position a year before the acquisition, shares that there was never a doubt in his mind about the opportunity for integration with WFS. “When I joined the company, I had a very clear ambition, which is to take Sats more regional and global,” he tells The Edge Singapore in an interview at Air Cargo Europe 2025 in Munich.
The CEO acknowledged the many naysayers and their opinions on the acquisition when it was first announced, but the negative sentiment did not affect him “at all” because he believed that the WFS team were “a good bunch of people that will join us”.
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“I’ve seen a lot of companies go global, and I ask myself: ‘Why aren’t Singapore companies making it big?’ We can’t just stay big in Singapore [only] and be happy with that,” he adds.
Mok’s background perhaps explains the strength of his conviction. Before joining Sats, he built an extensive career spanning a global logistics giant, DHL, consultancy work at Accenture and a role at private equity firm KKR. With years of experience in the global supply chain industry, he had hoped Sats could one day scale to similar heights.
Mok believed that the ambition to go global would result in “newer paths” for a younger generation of Singaporeans, and the regional and international expansion of a Singaporean company would result in job creation, higher salaries and a more worldly mindset.
While the acquisition was “a strategy that we decided”, the final decision was ultimately up to Mok. “With the backing of the board, and my team… and because of my background in global supply chain, I saw this as an opportunity… I look at the glass half full,” he says.
The acquisition of WFS paid off faster than expected / Photo: Sats
Earnings quadrupled
This positive outlook is reflected at this year’s Air Cargo Europe, one of the industry’s most prominent trade shows, which marks the first time Sats is exhibiting alongside WFS. In previous editions, WFS appeared independently while Sats maintained only a modest presence. Their joint showing signals to the industry that WFS’s integration into Sats is now all but complete.
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Mok’s bet on the acquisition paid off faster than expected. Less than two years after the announcement of the acquisition, Sats swung back into the black for FY2024 ended March 31, 2024, reporting earnings of $56.4 million, compared to the loss of $26.5 million it reported in FY2023.
In its most recent full year results ended March 31, Sats reported earnings that quadrupled from a year ago. Earnings came in at $243.8 million for FY2025, an explosive growth from the $56.4 million reported in FY2024.
On that account, Sats saw its revenue for the full year grow 13% y-o-y to $5.8 billion, the highest ever in its entire history as a company. For the fourth quarter alone, revenue saw a 10.4% y-o-y growth to $1.48 billion. The group’s ebitda increased 16.8% y-o-y for FY2025 to $257.5 million, with a profit margin expansion from 16.5% to 17.4%.
Sats attributes this surge to growth in business volumes and contributions from an expanded operational network. The acquisition of WFS has made Sats the world’s largest air cargo handler, now operating over 215 stations in 27 countries and covering trade routes responsible for more than half of global air cargo volume. Previously, Sats operated in just 55 stations across 13 countries.
“The fit with them and us is perfect, because we are the leader in Asia Pacific and they are market leaders in the US and EMEA (Europe, Middle East and Africa), and we have very little overlap,” says Mok. The integration created a leading force in global trade.
Sats, which has two main business drivers — food solutions and gateway services — saw its revenue by business segment develop from 50% from food solutions, which last accounted for $640.9 million in FY2021, to 50% in cargo handling, which accounted for $4.5 billion in revenue in FY2025.
The wide revenue gap between cargo handling and food services is proof that Mok and his team made the right call in prioritising cargo handling. Rather than focusing solely on ground handling, cargo is a global business and the backbone of international trade, says Mok. In FY2025, Sats-WFS handled 9 million tonnes of cargo, outperforming the International Air Transport Association’s (IATA) global growth benchmark of around 6% for the year, rising 10.6% y-o-y.
Sats attributes its full-year cargo growth to a rise in high-tech shipments and e-commerce, boosted by volume shifts from ocean freight amid ongoing geopolitical uncertainties such as the Red Sea crisis. Europe, says Mok, became the main beneficiary of the crisis due to its key trade routes linking Asia to the rest of the world. These redirected trade flows remain active today, and Sats continues to benefit through its global air cargo network. “Volume growth [during the crisis] was good, India was exporting a lot into Europe, and all we saw is that despite all the challenges, because we have a network, certain stations [volumes] may come down but other stations may then experience a growth in volumes,” the CEO adds.
In April, following the impact of US President Donald Trump’s “Liberation Day” tariffs, several brokerage analysts downgraded their ratings on Sats. Most notably, UOB Kay Hian’s Chen cut his target price from $4 to $2.89, citing the US as Sats’ largest air cargo handling market and the announcement that air cargo from China and Hong Kong would no longer benefit from the de minimis tax exemption, as key reasons.
Sats prepared for the worst, anticipating price cancellations of around 10% to 15% of all volumes. However, Mok notes that after Trump closed the de minimis loophole and tariffs were imposed, freighters were diverted away from the US to Europe and the Middle East, driving higher volumes in those regions where Sats was ready to respond. “So again, it helped us,” says Mok.
“That also gave us confidence that despite all these challenges, new flows will emerge and we will benefit with the network that we have,” says Mok. “But very importantly, I will say this, we have to be super agile. We have got to monitor all these flows; there could be flows that we are not involved in, and we need to be there.”
Mok says the group sees no reason to alter the target set during last November’s Capital Markets Day, despite analysts’ questions following escalating global trade tensions. The company aims for revenue growth exceeding 50% over the next five years, with a target of $8 billion in revenue by 2029.
“We still have a few more years to bridge the gap, and I think it’s achievable. If there are any more changes to the geopolitical situation, we’ll come back and announce to the analysts,” adds Mok. For now, Sats remains “very optimistic” that nothing at the moment requires a change in trajectory.
More specialised cargo handling
Could an acquisition be on the horizon to help Sats reach its $8 billion revenue target by 2029? CEO Kerry Mok says there is currently no company comparable to WFS in the market, but the group remains alert to smaller firms that could be a “strategic fit” to strengthen its local presence and global network.
Since repaying the $700 million loan used to fund the WFS acquisition, Sats has grown its cash and bank balances in the latest financial year. The group’s free cash flow turned positive, reaching $228.3 million by the end of March, supported by higher operating profit and effective financial and liquidity management. It also partially reduced its debt by repaying $200 million in Singapore dollar Medium Term Notes (SGD MTN) that matured in March.
“As the cash flow situation remains positive, we’ll try to reduce more of our debt, but we need to keep some of this for our capex and growth as well,” says Mok.
The company has continued to pursue partnerships and expansions since acquiring WFS. Most recently, Sats announced a $250 million investment to upgrade ground support equipment and cargo handling capabilities at Changi Airport, ahead of the opening of Terminal 5 in the mid-2030s.
In Europe, Sats is constructing a 20,000 sq m (215,278 sq ft) warehouse in Lyon, a key hub for the life sciences and pharmaceuticals in southeastern France. The facility will offer increased capacity for temperature-controlled cargo and is expected to be completed in 2026. This brings the total warehouse space operated by WFS at Paris Charles de Gaulle airport to 120,000 sq m.
Asked about Sats’ arrival from WFS’s perspective, Laurent Bernard, vice-president of WFS France, says the impact has been overwhelmingly positive for both employees and the French union. For years, under the ownership of various PE firms, WFS “suffered from a lack of investments”, adds Bernard.
“But when Sats arrived and announced that they wanted Paris as a main gateway, [there was] a [long-term] five-year plan, brand new buildings for e-commerce and in Lyon… there’s visibility for the long term,” he adds. For context, France handled 1.3 million tonnes of cargo last year, with 70% passing through Paris’ Charles de Gaulle Airport.
A day after the Air Cargo show in Munich, Singaporean media were invited to tour WFS’s warehouses in Paris. Three specialised facilities — for e-commerce, pharmaceuticals and freight forwarding — were showcased to highlight Sats’ strategy to expand capacity for handling goods, including pharmaceuticals, perishables, e-commerce, freight forwarding, live animals, express and mail.
The specialised handling methods and rapid delivery times command a significant premium, which is why Mok declared at Air Cargo Europe: “We are going after specialised handling”.
“We now have the network, we have the scale and volume, we’re pushing ahead with more of such services,” says Mok. “Semiconductor products, perishable, high value items… How do you handle them in a far more strategic way, rather than just general cargo?”
Using a million-dollar pharmaceutical shipment as an example, Mok says Sats has the capabilities to maintain temperature integrity at every touchpoint and ensure expedited handling. “All we’re saying is, with the network that we have, work with us so your high-value product gets taken care of and expedited to your end customer quicker.”
Although cargo handling is now Sats’ largest business, Mok has maintained focus on the group’s original core, food solutions. Several years ago, Sats chose to invest in expanding its food business, supplying large organisations and producing ready-to-eat meals as a way to cushion against the volatility of the air travel market.
This commitment is reflected in Mok’s efforts, having spent four years cultivating a relationship with Mitsui, the conglomerate managing logistics for Japan’s 7-11 convenience stores, which has led to a joint venture leveraging both companies’ strengths.
Elsewhere in China and India, Sats has invested in central kitchens, is seeking to expand capacity in Japan and is currently building phase two of its food business facility in Thailand, which will boost output fivefold. Mok says: “To be honest, we are not the largest food manufacturer. We will never be. So whatever capacity we have, we want to create good, high-quality food products that are sustainable, that bring good quality to the consumers.”
Eyeing Latin America and Africa
Despite Sats being one of the largest networks globally, Mok believes significant growth opportunities remain. The group has only a limited presence in Latin America, a market poised for expansion. Beyond its ground operations in Brazil, Sats has no footprint in Mexico, a key hub despite US tariffs. In Africa, its presence is currently limited to South Africa.
Even in its existing locations, many of its warehouses are full, says Mok. “It’s very important that in places we operate, we must be among the top three players because local and global scale matters,” he adds. “This is a strategy we’ll continue to play and use operational efficiency to help improve our margins.”
As a result, Sats has now regained the confidence of most analysts. “We remain confident that Sats has both the capability and capacity to support the growth of both its gateway services and food solutions businesses in FY2026,” notes CGS International analysts Tay Wee Kuang and Lim Siew Khee in their May 29 note, where they kept their “add” call and $3.60 target price. The analysts’ re-rating catalysts include Sats’ expanded footprint for its cargo operations, supporting new contract wins and a swift step-up in utilisation of its new central kitchens across China and India.
“Sats also sees growing demand on China-Europe, Middle East and Africa lanes. With its strong cargo station network and commercial contract pipeline, Sats is well-positioned to backfill any volume lost from US-bound e-commerce with demand from other regions,” notes PhillipCapital’s Liu Miaomiao in her May 26 note, where she has indicated her “buy” call and $3.58 target price.
Many cite ongoing tariff uncertainties as significant risks to the stock, with outcomes largely dependent on Sats’ management’s ability to execute during this challenging period. “We keep an eye out for Sats’s growth trajectory in subsequent quarters as well as portfolio developments for further re-rating catalysts,” says OCBC Investment Research’s Ada Lim in her May 26 note. Lim figures this counter is worth $3.73.
For dividend-focused investors, Sats declared a final dividend of 3.5 cents, bringing the total FY2025 payout to 5 cents, reflecting a 31% payout ratio and a full-year yield of 1.7%. Analysts expect dividend payments to gradually increase over the coming years as the company reduces debt while balancing distributions with repayments.
