SATS Ltd: Japanese subsidiary signs multiyear catering contract worth ~S$325m
- SATS Ltd (SATS) announced this morning that its 59.4%-owned Japanese subsidiary, TFK Corporation (TFK) has secured a multi-year inflight catering contract from Delta Air Lines (Delta), estimated to worth ~JPY30b or ~S$325m.
- TFK is expected to commence catering services to Delta at two international airports (i.e. Narita and Haneda) in Tokyo by Oct 15.
- Delta currently operates 22 peak-day flights from these two international airports and will close its own inflight kitchen in Narita post transition to TFK.
- As at end FY15, TFK’s contribution to SATS bottom-line is not material due to competitive margins.
- Given that this contract is a multi-year contract, and SATS has stated that the contract is not expected to have any material impact on its NTA/share and EPS for FY16, we keep our forecasts unchanged for now.
- Currently, we have a HOLD rating on SATS with a FV estimate of S$3.11.
(Eugene Chua)
Source: http://www.ocbcresearch.com/
