Analyst Wee Kuang Tay of CGS-CIMB reiterated a Buy rating on SATS, boosting the price target to S$3.83.
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Wee Kuang Tay has given his Buy rating due to a combination of factors that highlight SATS’s strong performance and growth potential. The company’s gateway services have shown significant revenue growth, with a notable increase in cargo volumes and flights handled, leading to an expansion in EBIT margins. This growth is supported by SATS’s strategic decision to maintain its cargo handling workforce in the US, which allowed the company to quickly adapt to changing demand conditions.
Moreover, SATS’s food solutions segment has also contributed to its positive outlook, despite a decline in non-aviation meals due to operational consolidations in China. The consolidation has improved operating leverage, and a new contract with Starbucks in China is expected to enhance profitability further. These factors, combined with an upward revision of EPS forecasts and a raised target price, underpin Wee Kuang Tay’s confidence in SATS’s ability to outpace industry growth, particularly in its cargo handling sub-segment.
In another report released today, DBS also maintained a Buy rating on the stock with a S$3.80 price target.