SATS LTD.
SGX:S58
SATS Ltd - Terminates Memorandum of Agreement With Turkish Airlines
- Mutual agreement with Turkish Airlines.
- Cargo vol may be affected by trade tensions.
- Passenger vol to grow.
Healthy 1QFY19 results
- SATS posted a 3.0% y-o-y increase in revenue to S$439.4m and an 11.5% increase in net profit to S$63.9m in 1QFY19. The latter increased by 5.9%.
- Share of after-tax profits from associates and JVs dipped 1.3% with lower contributions from Gateway Services’ associates/JVs.
MOA with Turkish Airlines terminated
- With respect to SATS’s Memorandum of Agreement (MOA) with Turkish Airlines relating to the provision of in-flight catering services at the Istanbul New Airport, the relevant parties have mutually agreed to terminate the MOA.
- SATS also recently experience in this segment of the market.
Decent dividend yield of 3.7%
- Despite the threat of SE Asia to keep pace with burgeoning consumer interest. However, pricing pressures are expected to remain as airline margins are still constrained, especially in Asia.
- We tweak our cost of equity assumptions and our fair value estimate slips slightly from S$5.50 to S$5.39.
- Currently, the stock has a forecasted FY19F dividend yield of 3.7%.
- (Downgrade to HOLD)
Low Pei Han
OCBC Investment Research
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https://www.iocbc.com/
2018-07-20
SGX Stock
Analyst Report
5.39
Down
5.500
