Company Coverage
SATS (SATS SP): 1QFY27: Temporary Margin Pressure Masks Strong Fundamentals; Share Price Weakness Presents A Good Buying Opportunity
BUY (Maintained)
Current price:
Target price:
Upside:
S$4.12
S$5.00
21.3%
Analyst
Highlights
- Reported net profit rose 6.0% yoy to S$75.1m; excluding one-off JV/associate
provisions, core net profit would have been S$80m, in line with our forecast.
- Business fundamentals remained strong. Revenue grew 11.3% yoy, backed by
steady to strong business volume growth across key business lines.
- Margin pressure could persist for another 1-2 quarters, due to operational
inefficiencies and higher input costs caused by geopolitical events but these
factors are temporary by nature.
- Maintain BUY on SATS, keeping target price at S$5.00. The sharp sell-off
yesterday has created a good buying opportunity.
Analysis
- Reported net profit a slight miss but core net profit in line. SATS’ reported
net profit rose 6.0% yoy to S$75.1m, slightly below our S$80m forecast. SoAJV
declined 18.9% yoy to S$26.8m due partly to non-recurring provisions relating
to certain ground-handling JVs affected by LCC weakness amid Middle East
disruptions. Management indicated that excluding these provisions, SoAJV
would have been broadly flat yoy and PATMI would have been close to S$80m.
The provisions are one-off and are not expected to recur.
Highlights
- Reported net profit rose 6.0% yoy to S$75.1m; excluding one-off JV/associate
provisions, core net profit would have been S$80m, in line with our forecast.
- Business fundamentals remained strong. Revenue grew 11.3% yoy, backed by
steady to strong business volume growth across key business lines.
- Margin pressure could persist for another 1-2 quarters, due to operational
inefficiencies and higher input costs caused by geopolitical events but these
factors are temporary by nature.
- Maintain BUY on SATS, keeping target price at S$5.00. The sharp sell-off
yesterday has created a good buying opportunity.
Analysis
- Reported net profit a slight miss but core net profit in line. SATS’ reported
net profit rose 6.0% yoy to S$75.1m, slightly below our S$80m forecast. SoAJV
declined 18.9% yoy to S$26.8m due partly to non-recurring provisions relating
to certain ground-handling JVs affected by LCC weakness amid Middle East
disruptions. Management indicated that excluding these provisions, SoAJV
would have been broadly flat yoy and PATMI would have been close to S$80m.
The provisions are one-off and are not expected to recur.
BUY (Maintained)
Current price:
Target price:
Upside:
S$4.12
S$5.00
21.3%
Analyst
IMPORTANT NOTICE - DISCLOSURES AND DISCLAIMERS
This report is provided subject to, and must be read together with, the full Disclosures / Disclaimers available at the following link: this link, which are incorporated by reference into this report. In particular, this report is intended for general circulation and informational purposes only and does not constitute personal investment advice or a recommendation to buy or sell any investment product or security. You should independently evaluate the information and, where necessary, seek advice from a qualified financial adviser regarding the suitability of any investment. Analyst certifications required under applicable regulations, including SEC Regulation AC (where relevant), are included in this report. By accessing, receiving or using this report, you acknowledge that you have read, understood and agreed to be bound by the Disclosures / Disclaimers, as may be amended, supplemented or updated from time to time.
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