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Welcome to SATS' First Quarter Financial Year 2019-2020 Earnings Conference Call.
Before we begin, SATS would like to remind you that certain comments made during this call may contain forward-looking statements. Many of these forward-looking statements can be identified by the use of words such as may, will, expect, anticipate, estimate, assume, continue, project, plan and similar words and phrases. The company's actual results and future financial condition may differ materially from those expressed in any such forward-looking statement as a result of many factors that may be outside the company's control, including, but not limited to, changes in the business environment. The company does not undertake any obligation to update its forward-looking statements.
I will now hand over the call to Carolyn Khiu of SATS. Please go ahead.
Hi. Good evening, everyone. This is Carolyn from Public Affairs and Branding. Earlier this evening, we released our first quarter FY '19-'20 results. With me here are Alex Hungate, President and CEO; and Manfred Seah, CFO, to take you through the results.
Let me now hand over to Alex to get the presentation going. Alex, please.
Thanks, Carolyn. Welcome, everybody. Thanks for joining us. I'll take you through the executive summary, and then I'll hand over to Manfred for the group financial review.
The first slide shows some of the volume numbers for the quarter, the year-on-year change, big increase in passengers handled, primarily because of the addition of the passenger volumes from Malaysia, the GTR subsidiary, which we've now consolidated. There was also underlying increase in the Singapore passenger numbers. A good increase in the volume of meals served as well. That was driven by increases at TFK in Japan and also underlying growth in Singapore.
Flights handled jumped dramatically, more than doubling, and that is driven primarily by the addition of the flight volumes in GTR. Our main customer there, just to remind you, is our joint venture customer -- partner, AirAsia. So they have many flights with narrow-body aircraft.
Cargo handled is the one that's gone down. In line with the softening global economy, we see that cargo volumes are also declining across the region. This number, the declines are 452,000 tons in the quarter, reflects the cargo operation in Singapore. But it is sad to say that our cargo associates around the region have also seen softer volumes.
And then finally, an increase in number of employees is due to the consolidation of GTR, the subsidiary. So we now count the employees in our total group.
Now moving to the next page, the executive summary of the first quarter financial performance. Group revenue grew 5.8% despite the difficult environment. That's mainly because of the consolidation of GTR, but also there is underlying growth in the catering operations here in Singapore and in TFK Japan.
The earnings before interest, tax, depreciation and amortization declined by 2.5%. That's primarily driven by the lower cargo revenue that I referred to earlier and also the loss of the Jet revenues in Singapore when -- they -- we lost 9 flights per day from Jet Airways.
PATMI decreased 14.4%. There's a number of factors in there, which you'll have explained during the rest of the presentation. But there's, for example, a lower foreign exchange gain this quarter versus a year ago, plus the cargo issue I talked about.
And the next line item, which is a drop in the share of earnings from associates and joint ventures, this is particularly because of the Jet suspension in India. You'll see later on with the new disclosures we're giving you on the associates' profitability, that there was a drop in the contribution from the Indian associates. Without that actually, the earnings from associates would have increased by 17%. The other drop you'll see later on is from China, where we have startup costs from Daxing Airport preopening, which will be in October.
Operating margin fell 2.6 percentage points, in line with what we've just talked about. And then of course, earnings per share also declined in line with what we've just talked about.
So now we can start to give you a bit more color. So I'll hand over to Manfred on the financial review.
Thanks, Alex. Good evening, everyone. I shall take you through the SATS financial highlights. As you can see from this deck of slide, we have changed somewhat. We've kept it consistent with what we have presented at the CMD. So as promised, we are providing you with a bit more information, particularly on the associates' side. \
Now group revenue -- we are on Slide 7. Group revenue grew $25.7 million with growth in both Food and Gateway. Food grows about 1% with growth registered in our aviation subsidiaries. These are SATS Catering in Singapore and TFK in Japan. Gateway increased $23.7 million, of which $22.5 million related to the consolidation of GTR entities. The growth was partially offset by lower cargo revenue, suspension of the Jet Airways and grounding of the 737 MAX recently.
Operating profit decreased $8.1 million to $56.8 million mainly due to lower cargo revenue, Jet Airways impact as well as lower foreign exchange gain. You can see the negative jaw was actually caused by these factors.
Share of associates decreased by $0.7 million mainly due to credit losses amounted to $3.3 million for the Jet Airways. Excluding the provision, share of results from associates would've increased as Alex said, $2.6 million or 17%. PT CAS has recovered. Evergreen, AAT, Maldives, MCSC and TCS remained the top contributor to our share of results. As a result of that, PATMI decreased by $9.2 million to $54.7 million.
On Slide 7 (sic) [ Slide 8 ], we look at some financial indicators. As you can see from the table, our margins are generally lower for reason which we have already described. EPS and ROE are lower due to lower reported earnings while NAV per share improved to 1.3 -- $1.53 per share. Debt/equity ratio increased to 17%, due to the new accounting standards, which was adopted. This was SFRS(I) 16 for leases. Excluding the impact of the new accounting standard, debt/equity ratio would have remained at 6%.
For the segmental revenue on Slide 9, Food contributed 52% while Gateway is 48%. Aviation continued to account for more than 88% of the group revenue. In geographical terms, Singapore accounts -- accounted for 80% of the group consolidated revenue, and the increase in ASEAN ex Singapore is -- was due to consolidation of GTR.
Moving on to the slide on SATS share of revenue and PATMI by region. Combined revenue grew 3.6% to $647.6 million (sic) [ $647 million ]. Revenue growth of 7.8% arising from Japan was due to volume increase while the increase in ASEAN was due to GTR consolidation.
At the PATMI level, the decrease in PATMI of Greater China was due to lower cargo volume experienced by the associates, and the Indian associates were also affected by the provision for credit losses related to Jet Airways. Now on this slide, you can see that the year-on-year growth for each of the region, particularly for ASEAN. You can see double-digit growth for ASEAN. Now some of these negative numbers, particularly for others, the drop of revenue, this was due to the FASSCO deconsolidation.
Moving on to Slide 11 on group expenditure. Expenditure has increased by $33.8 million to $408 million mainly due to consolidation of GTR, which accounted for 20.6% of the increase. Excluding GTR, the group OpEx would have reported a lower increase of $13.2 million. Higher depreciation and amortization charges was due to the adoption of the new accounting standard with effective -- effective from 1st April 2019. Other costs arose due to higher maintenance of GSE equipment and vehicles, IT expenses for digitalization and transformation projects, fuel costs and lower exchange gains.
Moving on to the balance sheet in Slide 12. I will just go through a couple items here, particularly those that have changed. You'll see that our -- there's higher investment in joint venture and associates. This was resulted from the capital injection in passing investments and our additional injection into KrisShop. You'll see that increase of about $20-odd million. Now cash and short-term deposit remained strong at $401 million, increased from $350 million as reported at the year-end.
Group cash flow in Slide 13. Net cash from operations dropped about $11 million. This was due to lower earnings for the quarter. Our free cash flow remains healthy at about $70 million for -- at the end of first Q. Now this is my last slide.
And I shall hand over to Alex for the outlook statements.
Thanks, Manfred. I talked earlier about the softening of the air cargo market. So that features upfront in our outlook statement. We do often see that cargo is the canary in the coal mine for the global economy and world trade, and that's something that we've seen here in Asia every month for this first quarter of the year. The cargo volumes have been lower than the prior year.
Aviation passenger volumes, however, are still growing. The rate of growth has slowed down, but they're still growing and -- as has the number of flights. Despite the fact that we've seen the 737 MAX grounding, there's still an increase in number of flights handled. And we expect that pattern to continue, albeit more slowly as I mentioned.
The growth in demand of -- for food from the food service expansion in the big Asian cities is still continuing. So that seems to be relatively resilient to the downturn in world trade. No doubt, that will slow down slightly, but we don't see any change in that trend.
And then we've also highlighted here that the cruise industry is expected to continue to grow in Asia. In particular here in Singapore, we're expecting the -- an increase in the number of passengers per cruise ship that calls here at the Marina Bay Cruise Centre.
So going forward -- I haven't written a lot here for the strategy because we just finished our Capital Markets Day. But just to reaffirm, we will continue to invest to strengthen our market leadership, both in in-flight catering and ground handling across Asia Pacific and then continue to invest in our digital network that connects the cargo operations that we have across the region and the digital integrated supply chain that connects our kitchens across Asia, because we think this gives us a long-term competitive advantage against local competitors.
So that's a summary of the outlook, and now we'll hand over for Q&A, please.
[Operator Instructions] Our first question, we have Siew Khee from CIMB.
Just wanted to check on the disclosure of your associates because I know it is a lot more detail now that you've given us in terms of the revenue side. But was there a consolidated one by division, as in like full associate is how much and gateway associate is how much and there's a profit? I may have missed that out while printing.
Okay. Siew Khee, this is Manfred here. Thanks for the question. And if you look at Slide 19 -- actually, Slide 18 and Slide 19, yes? This is actually in the Annex. I have left this for your reference. I didn't go through them. You will see that the share of associates and JV, there's a pie chart there on the bottom right-hand. That gives you the share of earnings.
Okay. Okay. And also can I just check in terms of the GTR revenue contribution for this quarter being a subsidiary? How much is it?
$22.5 million for first Q.
And also for Jet Airways provision, can we just get a comfort that you have actually done a thorough review and this might be all?
Yes. This is the full provision, unfortunately, has hit us this quarter.
Yes. So we're now 100% provided, Siew Khee.
Okay. And also, do you see any -- if you would quantify the implication of the grounding of Jet Airways and your India business, how would you see the revenue being impacted? I know that you might actually enjoy the benefits from other airlines from the excess capacity of this. But net-net, do you see negative or neutral?
So what we're seeing in India is a very rapid take-up of the slots vacated by Jet, but the full process to reconcile its suspension is not yet completed. But you can see very clearly that both the aircraft and the slots, in the meantime, have been taken up by others. Particularly with the grounding of the 737, there is a shortage of aircraft. So what we'll see is that there'll be a gradual replacement of the Jet volume by other customers.
We are the market leader in ground handling and aviation catering in India. So we should pick up our fair share of the other airlines moving into that space. And indeed, for the international slots that Jet had, for example here to Singapore, we have seen some of those taken up already, some by IndiGo. More recently, Vistara announced that they would take 2 of those slots, and Vistara is an existing customer of ours.
So I think it will come back, but not immediately, Siew Khee. I think you'll see there's plenty of competitive pressure for people to want those slots. But because of aircraft shortages and other matters, it will probably take a couple of quarters before it's fully taken up.
Our next question, we have Louis from Crédit Suisse.
I've got a few questions. Maybe I'll just ask them one by one. I think firstly on the operating statistics. Understand that the numbers include the GTR and [ Solita ] services, I think. Is it possible to give us some color of what the underlying would be on a like-for-like basis?
Usually, we would refer you to the Changi Airport statistics. If you look, I think they're showing about 1.5 percentage points increase in their passenger volume. We -- as you know, we have the majority market share of Changi. So it's a good proxy. We actually haven't pulled them apart. But if you assume something like 1.5% of underlying in Singapore, that should be about right.
Okay. So actually on a related point, I think, Alex, you mentioned that you see underlying growth in the Singapore passenger numbers as well as the meals served. But at the same time, I see that the revenues for Singapore were just about flat. So I mean would I be right to kind of assume then that there was some overall lower pricing involved?
There's a range of things going on in the mix. We saw increased revenues for the catering side in Singapore. But with Jet Airways just dropping out of the market in the quarter with 9 flights a day, that did impact the Gateway revenue. So there's no -- I wouldn't point to a change in pricing. It's more just a shift in mix and the different services that we provide.
Okay. Got it. And also on Jet Airways, just to clarify. In terms of the impact on your share of results, that would be the credit losses, $3.3 million. How about on the EBIT level? Is that more from the credit -- any provisions for your credit losses? Or is it mainly from the actual underlying loss of those flights that you mentioned?
Louis, it's Manfred here. There are a couple of angles to look at this, right? To -- one is the credit losses of $3.3 million. That is the -- account for the full balance provision for the Jet Airways receivable. This is group-wide. So we have taken full provision group-wide.
The second area is actually the loss of revenue because of the grounding of flights, as Alex has mentioned. Total number of Jet Airways flights and -- that basically was [ decamped ] was about more -- in excess of 500 flights for that quarter. And that has caused if you like, the loss of revenue. Therefore, it created the negative jaw because we -- our cost is a bit sticky. So you can't [ decamp ] the entire cost.
Next, we have Ajith, K. from UOB Kay Hian.
A couple of questions from me. Excluding the $3.3 million provision that you mentioned for Jet Airways on a -- on the group basis, would you say that loss of revenue from Jet Airways had a greater impact on, say, the Gateway Services operations or the grounding of the B737 MAX aircraft? So that was my first question.
Second question is on the cruise business. Perhaps if you could just share with me and everybody here on -- in terms of what is the current handling capacity at MBS, the cruise center? And I know Alex, you mentioned that you still expect growth. But just trying to get a sense of whether there's sufficient capacity for this growth in terms of the vessels.
Then on the third question is more on the accounting of the leases. I'd just like to get a sense on what is the average duration of the lease if you can just point some indication so that we can take that into account in our modeling.
Fourth question is on -- whether in this current quarter, SATS was impacted by the strikes by -- at Eva Air or -- and whether or not you see that extending going to the next quarter. Yes, these are my questions.
Okay. Thanks, Ajith. Good questions. So the first one on Jet. In Singapore, bigger impact on Gateway than on Food in terms of the operating revenue loss, if you like. But the credit -- not as large -- the total of both of those, not as large as the credit provision group-wide of $3.3 million that Manfred just mentioned. So although it's a sizable impact, it's not quite that big. But there is impact in the joint ventures in India. So if you -- probably you add -- if you add that up as well, in terms of loss of revenue, and then take our share of that, you're looking at something probably about the same scale. So all in all, quite a big hit. But as I said, that second effect, hopefully, as I mentioned in my answer to Siew Khee earlier, that second effect hopefully will recover over the next quarter or so as other airlines fill in the demand gap left by Jet.
Moving on to your second question, which was the Marina Bay capacity. In the Northern Hemisphere winter season, it's true to say that the -- there aren't many days where the cruise center is at maximum capacity, either with 2 or 3 ship calls. But the -- what we're seeing now is that the -- although the bookings for this current year are confirmed, and so, therefore, we're not forecasting a very large increase in number of ship calls, we are seeing that the expected passenger capacity for the new ships that are being booked is much larger. So the new class ships moving to ovation-scale ships can be up to a couple of thousand passengers per ship more than the ships that were booked to come here last season. So that's why in our outlook statement, we say that we are expecting a higher number of passengers to use the cruise center. And that does help us with our revenues in the cruise center.
Your next question was the lease duration, which I'll hand back to Manfred for.
Ajith, this -- our leases are generally the land leases. So these -- the durations of which ranges between 10 to 30 years.
Okay. Okay. Land leases, okay. Got it.
And then the -- sorry. And then the last question you had was about Eva Air. They have had industrial action, which is a shame because, as you know, we've just invested through the Green Sky Catering (sic) [ Evergreen Sky Catering ] into an increasing capacity in our flight kitchen in Taipei. In fact, we've doubled the capacity of that flight kitchen. So far, they seemed to be managing the industrial action pretty well and maintaining quite a healthy flight schedule, particularly the flight to places like Singapore. But we can't say for sure what will happen going into the next quarter. So hopefully, they can still -- hopefully, the whole disagreement will resolve, and we will see limited disruptions in the coming quarter.
[Operator Instructions] Our next question, we have Wei Ming from Macquarie.
Just a couple of questions for me. Just want to clarify one thing you mentioned just now in terms of this impact from Jet Airways where they had a -- I know you guys were catering to about 9 of their flights, but you mentioned that some of the slots have been taken up by Vistara already.
Yes. That's right. The inbound slots into Singapore that Jet have vacated, some of them have already been reallocated. Two of them went to Vistara, and several of them went to IndiGo as well. There are still some remaining slots, and I think Changi Airport will be in discussions with various Indian airlines about how those are allocated.
Okay. So out of 9 slots, 2 went to Vistara, one went to IndiGo and this happened in -- recently in July or...
No. They haven't -- they've been announced but Vistara hasn't started their flights yet. IndiGo, I think, have started that flight and may have others coming as well.
Okay. And just wondering because then you said it is going to take a couple of quarters for the slots to be filled up while this one was fought for -- like I mean this Vistara and IndiGo one was -- quite quickly, it got filled up, right? So why are you guiding for a couple of quarters before the slots get filled up?
Yes. So a couple of comments. Firstly, on the Singapore slots, it's a question of the Changi Airport, I guess, coming to agreement with the other airlines about taking them up. So that's takes a period of time to negotiate. And then the airlines themselves have to then find the aircraft.
And then my comment was regarding actually the entire process of filling up the capacity across India and Asia that's been left by the Jet suspension. So I was thinking actually -- when I mentioned 2 quarters, I was thinking of the India capacity as well as the Singapore end of it.
Okay. Okay. Sorry. So the Singapore segment may be a bit faster, I guess, because -- like the Vistara and IndiGo one were quickly -- filled up quite quickly. So the process there may be a bit more efficient versus the capacity being filled on the India side. Would that be right to say or no?
I think it'd be the right to hope that that's the case. Yes. I think -- I know Changi Airport are very active on this already. So hopefully, they'll be able to move quickly.
Okay. And can I just check on the EBIT contribution from GTR for this quarter? Because in fourth quarter, you actually gave the EBIT contribution from GTR.
Okay. So the -- sorry, this is Manfred, Wei Ming. Sorry, revenue-wise it is $22.5 million. Cost is about $20.9 million, I think. Yes, 20 point.
Okay. And just last question for me.
The EBIT contribution -- sorry. EBIT contribution is about 8.5% thereabout. Yes.
Sorry. EBIT contribution is 8.5%. That is for the margin, right?
That is EBIT margin.
That's the margin, okay.
Maybe I can explain a little bit. It may appear slightly lower than ours but you -- we have guided that the GTR side is going to the cargo. So there are some development costs early -- if you like, some development costs in the initial period, which has caused a drag to the EBIT margin.
Okay. And just last question for me. Any change in the utilization rate for the Kunshan central kitchen?
Yes. The Kunshan customer base continues to grow. Most recently, they've added ALDI, which is a German hypermarket, to their customer list, and they're now also serving Luckin Coffee to add to the existing customers like Yum and Haidilao. The existing customers are also adding new SKUs to the -- to what they source from Kunshan. So steady increase in utilization.
I think the utilization is still less than 50%. But as we mentioned last time, that entity is already breaking even. So very much in line with the plan that we disclosed 2 or 3 years ago when we first announced the venture.
Okay. That's on a cash flow basis. But on a P&L basis, it's also breaking even now.
Yes. On a P&L basis, it's breaking even.
[Operator Instructions] Our next question, we have Siew Khee from CIMB.
I have got 4 more questions. In terms of margin that you have achieved this quarter, operating margin of about 12.2%, can we assume that this would be sustainable level that you're looking at?
Okay. Siew Khee, I think -- we don't guide on forward margin. But you can see that this -- in this quarter, there'll be a -- there's a number of external headwinds that we've confronted. Some of them are more one-off in nature, and some of them are related to the stage of the cycle. So an extended cycle -- extended downturn in world trade, of course, will continue to put pressure on cargo margin.
But things like -- I guess you could argue that Jet -- the Jet suspension is related to difficult conditions externally as well. But the provision aspects of that, hopefully, are one-off. And I think the revenue hit, the sudden revenue hit is something that, as I mentioned, should recover over the next several quarters because there still is underlying growth in passenger and airline traffic.
So I think you -- when we're talking about the forward margin, I think you -- I know that you put a lot of time into the modeling of this. I think you'll have -- you'll just have to unpack each of the different impacts that we're describing this quarter and come to your own conclusion on what the future margin might look like.
Okay. And also maybe comment on what's happening in your Indonesian associates and JV, like in terms of catering, in terms of Gateway, like what have you been seeing year-on-year, whether there's improvement or -- some color would be good.
Yes. I think -- what was it? 2 or 3 quarters ago, we announced that there've been some increased government levies, concession fees that had impacted PT JAS and its ground handling. And we said that they would then try to pass those on to the cargo community, and they have been doing that. This quarter, as Manfred mentioned, we see those actually gaining traction. And so you can see there's been a recovery in the earnings from PT JAS. I think that's a positive story.
The catering business there is smaller scale than SATS in Singapore for example. They have kitchens in Jakarta and also in Denpasar. We have increased the capacity in Jakarta for the catering subsidiary, which is called PMAD. And so that's a business that is in gestation if you like, and we hope to -- we're not getting a huge contribution from that now. But obviously over time, the volumes in Jakarta should start to increase, and therefore, it will make a contribution in the future.
Okay. And also in terms of the statistics. So you mentioned that for passengers, we just track what Changi has been doing. How about for flights? I assume that you would have some new contracts that have come in, and we should then actually look at the Changi data.
And if I were to take out the $22 million revenue from GTR in your revenue line for Gateway, PL Gateway is actually quite flat despite the headwinds in freight. So maybe some -- like how do you see the flights like? If you were to exclude the GTR statistics, what would they have been?
You're right, actually. The -- revenue-wise, although cargo has been impacted, the other ground handling activities continue to grow. So that cushions the impact of the cargo drop in revenue.
However, as you all know, the cargo business is one that has relatively good margins and has a particularly strong operating leverage. So it's a business that benefits margin when cargo volumes grow and then tends to impact margin disproportionately when cargo volumes shrink.
That's because we have large warehouses that are more and more mechanized. And so although we can reduce employment expense by cutting down on subcontractors in the quarter, we still have certain fixed costs and depreciation, which means that -- that's how the operating leverage works.
So that's why you see, although the revenue on Gateway held up quite well, the margin was impacted overall because of that operating margin -- operating leverage impact that we see on cargo.
Understand. What I mean is the flights handle statistics that you have, which include GTR, what would it have been without like...
Yes. It's similar to the -- what I mentioned earlier in terms of passengers, about 1% or 2% in the quarter year-on-year.
Okay.
We move on to some questions from online. We have 4 questions here. First one is from Kaseedit from Citi. When can we expect GTR rollout in the Philippines, India and Thailand and potential revenue size?
The other three questions is from Siew Wai from Saga Tree. First one, can you blame the impact of your revenue on weak cargo, Boeing suspension, loss of Jet Airways? And which one create more drag to SATS revenue in the quarter?
The second question is can I understand more on the current operating revenue in cargo business? What is the utilization of cargo segment now? How does the operating margin for cargo compare relative to corporate average? Is it higher or lower?
And the last question is on the Indonesian business. How much is PT CAS and PT JAS exposed to domestic travel as there is a sizable decline in domestic travel in Indonesia this year? Is this -- are the 2 companies impacted by that?
So over to you.
Okay. Thank you. Okay, yes. When we announced the joint venture with AirAsia to create GTR, we did say that it was on the roadmap to roll out in the Philippines, Indonesia and Thailand. We haven't yet announced those rollouts, but it's still our intention to expand the joint venture to all 3 of those markets.
One of the reasons why we slowed that down a bit is because we do have this additional opportunity in GTR's home market, Malaysia, to handle cargo. We started handling cargo -- some of the cargo in November 2018. But at the beginning of 2020, we'll actually ramp up significantly the volume of cargo that we handle.
But the management team is focused on that opportunity, which is very much -- got good synergies with the existing ground handling business in Malaysia. That's not to say that we won't continue with our intent to roll out in those 3 new markets. But it's fair to say that the priority has been addressing the cargo opportunity in Malaysia first.
Manfred, maybe you want to take the next question about the...
I'll address the -- your first question in terms of impact on revenue. Now we look at the suspension of the Jet Airways and 737 MAX as one bucket. So if you like, that loss of revenue is equivalent to the loss of revenue of cargo.
Now between Jet Airways and the 737, it's -- it is more Jet Airways SKU, I would say maybe 60-40 of that, yes? So if I were to follow your order, the ranking will be cargo, Jet Airways and Boeing.
Okay. Thanks, Manfred. The next question is about the -- how the operating leverage works in cargo and the relative margin, and I think I just answered that one.
So I'll move on to the Indonesian business. PT CAS does ground handling and cargo handling across 13 airports now in -- so they added one new airport this year in -- across Indonesia. The -- it has been impacted by a slowdown in cargo across the region that we referred to earlier. Despite that and despite the slowing domestic travel that -- that's referred to here, it has actually improved its revenue and its PATMI contribution year-on-year. So I think that reflects the fact that it's been able to pass on the increased concession fees that we -- that I referred to earlier. So despite the difficult environment in cargo, it's managed to increase its contribution.
[Operator Instructions] Our next question, we have Usman from Nomura.
Just one -- a few questions. With regards to MRFS -- sorry, IFRS 16, what would be the impact on the P&L draw?
And I have a question with regards to the Beijing Aviation Ground Services. I know in FY '18 Annual Report, you did disclose the amount of profits made, although these were unrecognized profits. I was just wondering what were the numbers for FY '19. And so those 2 are just my questions.
Okay. Thanks very much, Usman. So I think Manfred will pick up the IFRS 16 impact on the P&L.
The impact, actually, is minimal impact. It's about $0.5 million to the bottom line.
Okay.
Yes. And then the -- we show an aggregate contribution from the China associates. That is on -- what page is that, Manfred?
18 and 19. This is more the...
The PATMI is on Page 10 by region. So you could see Greater China at $4 million has declined almost 13% year-on-year. That is largely because of the pre-revenue investment in Daxing Airport, both in terms...
Sorry. But I understand that Beijing Aviation Ground Services, it's still recognizing unrecognized earnings if I'm not mistaken. Is that correct? Or you're starting to actually recognize those earnings as well.
Yes. We do recognize the earnings. In -- at one time, it was -- we didn't recognize the losses anymore because it's reached a point. But now, because it's profitable again, we started recognize it from, I think, 2 quarters ago.
Okay. All right. Okay, all right. Can I just get color on -- with regards to that? So in the annual report in FY '18, it was mentioned that the share of profits for that particular associate, Beijing Aviation Ground Services, was about $1.2 million in FY '18. Would the quantum be similar for FY '19? Just out of curiosity.
I'm afraid we don't disclose to that level. We can't guide on that, yes, yes. But -- sorry. If you take a look at Slide 18, 19, we disclosed the up to share of revenue. But in terms of the bottom line, we can't give you profitability of each of these entities. The -- we explained that during the CMD.
[Operator Instructions]
Hi. This is Carolyn again. I think we've come to the end of the session. So if you have follow-up questions which you need answers for, you can always e-mail any of us and then we get back to you.
Have a very good evening, and enjoy the rest of the day. Thank you.
Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.