Analysts raise Sats target price after strong earnings as aviation recovery takes off

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Analysts raise Sats target price after strong earnings as aviation recovery takes off

The Straits Times06-04

SINGAPORE - After two difficult years, Sats is back. At least that seems to be the growing consensus in the market after the aviation ground service specialist on May 29 posted strong fiscal 2024 ...

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Revenue almost trebled to $5.15 billion from $1.76 billion.At least four leading brokerages have put up “buy” and “add” calls on the stock, with analysts saying the much-enlarged Sats-WFS global entity stands to scoop up market share and ride the rapid recovery in global aviation.“The beat adds to our case that Sats’ earnings recovery will gain momentum in FY2025,” he wrote.The latest to join the growing list of analysts upgrading Sats was DBS Research, which on June 4 raised its price target to $3.60 from $3.40. Analyst Jason Sum highlighted the stock’s “attractive” risk-to-reward setup with a projected 25 to 30 p","collect":0,"end_time":0,"defaultTopTitle":"straitstimes.com","property":["earning"],"viewcount":null,"language":"en","relate_stocks":{"S58.SI":"新翔集团有限公司"},"translate_title":"随着航空业复苏，分析师在强劲盈利后上调Sats目标价","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"S58.SI":1},"content_text":"SINGAPORE - After two difficult years, Sats is back. \nAt least that seems to be the growing consensus in the market after the aviation ground service specialist on May 29 posted strong fiscal 2024 earnings and announced the resumption of dividend payouts.\nNet profit for the year to March came to $56.4 million, a turnaround from a loss of $26.5 million a year earlier. Revenue almost trebled to $5.15 billion from $1.76 billion. \n\n\n\nSats also declared a final dividend of 1.5 cents per share, compared with no dividend the previous year.\nThe good results come after a difficult year for the company following its purchase of bigger European rival Worldwide Flight Services (WFS) for $1.8 billion, which was completed in April 2023. \nThe deal saw Sats take on huge debt and undertake a dilutive share placement to fund the purchase - actions which did not please the market. As a result, Sats shares were pummelled.\n\n\n\n\nBut things look different now.\n\nSats is trading at $2.89 as of 2pm on June 4, 1.8 per cent higher on the day, and 20.4 per cent up from its low of $2.40 last year.\nAt least four leading brokerages have put up “buy” and “add” calls on the stock, with analysts saying the much-enlarged Sats-WFS global entity stands to scoop up market share and ride the rapid recovery in global aviation.\nIn a May 31 report, analysts Tay Wee Kuang Lim and Siew Khee set a $3.44 cents target for Sats, citing “surprising quarter-on-quarter growth in net profit of 4.1 per cent to $32.7 million” during the final quarter of FY2024.\n\n\n\nThey noted that Sats’ core business and WFS’ were operationally profitable, while contributions from associates and joint ventures (JVs) were stronger.\n“We reiterate ‘add’ as we are confident of Sats improving profitability for FY2025,” they wrote.\nSimilarly John Cheong of UOB Kay Hian noted that Sats’ FY2024 earnings beat his house expectations, with the resumption of dividend payments seen as symbolic of the company’s turnaround. \n“The beat adds to our case that Sats’ earnings recovery will gain momentum in FY2025,” he wrote.\nMr Cheong has a “buy” call on the stock with a price target of $3.22.\nMeanwhile OCBC Investment Research raised its fair value estimate on Sats to $3.31, from $3.09 while noting that the group’s FY2024 bottom line was a “strong beat”. \n\n\n\n\n\nMore On This Topic\n\n \n\nAfter three challenging years, Sats is starting to soar again \n\n\n\n \n\nSats opens its largest kitchen for ready-to-eat food outside Singapore in Bengaluru \n\n\n\n\n\n\n\n\n\nOCBC analyst Ada Lim said that the group’s top-line revenue growth would likely be driven by more commercial wins for its gateway services segment, along with further market penetration for its food solutions business given its increased production capacity.\nThe latest to join the growing list of analysts upgrading Sats was DBS Research, which on June 4 raised its price target to $3.60 from $3.40. Analyst Jason Sum highlighted the stock’s “attractive” risk-to-reward setup with a projected 25 to 30 per cent upside from its current share price level. \nSats president and chief executive Kerry Mok told analysts and media on May 30 that with WFS under its belt, the supersized company aims to seize global growth opportunities to create value for its stakeholders.\n“We have the network to benefit from any change, and our discussions with our customers are completely different,” he said.\nSats - already the biggest player at Changi Airport - is sitting pretty as global air passenger traffic set to recover fully to 2019 levels by the end of this year, with cargo traffic projected to grow by 4.5 per cent this year. \nThe company has said its financial focus remains on reducing debt and optimising its cash position to strengthen its balance sheet, reinvesting for sustainable growth, and returning value to shareholders.\nThe fact that the company has resumed paying dividends - something for which the company was well known prior to 2000 - is also seen as a sign of confidence and recovery.\n\n\n\n\n\nMore On This Topic\n\n \n\nSats picks former Cisco Asia-Pacific head as chairman-designate \n\n\n\n \n\nGround handling firm Sats defers new air cargo fee a second time to Aug 1 amid continued pushback","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"hasMoreComments":false,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false}}