Profile
Previous Close Price
Key Statistics
| Mar SGD mn | 2024 | 2025f | 2026f |
|---|---|---|---|
| Revenue | 5,150 | 5,741 | 6,126 |
| Net Profit | 74 | 231 | 310 |
| Profit Gth (%) | 1140 | 211 | 34.1 |
| PE (X) | 94.7x | 22.4x | 17.2x |
| Div Yield (%) | 0.4 | 0.8 | 1.4 |
| P/BV (X) | 2.3x | 2.1x | 1.9x |
Recent Developments
- 22 Aug 2024SATS Ltd: 1QFY25 results handily beat expectations; raised FY25/26 core net profit estimates by 7-8% and TP to SGD4.10
- 04 Jun 2024SATS: 4QFY24 results above expectations with resumption of dividends; ambitious long-term growth aspirations
- 29 May 2024SATS Ltd: 4QFY24 results above expectations with surprise reinstatement of dividends
- 01 Mar 2024SATS Ltd: 3QFY24 results in-line; FY25/26F earnings estimates largely unchanged despite positive developments due to margin pressures
- 15 Nov 2023SATS: 1HFY24 results in line, with encouraging signs of recovery in the cargo handling segment
- 14 Nov 2023SATS Ltd: <Earnings Analysis!> In-line 2QFY24; encouraging signs of stabilisation in air cargo market
- 16 Aug 2023SATS: 1QFY24 results largely in line; unfavourable accounting impact on earnings
- 31 May 2023SATS: 4QFY23 results slightly above our expectations; business recovery on track but full recovery still sometime away
- 30 May 2023SATS Ltd: 4QFY23 results slightly above expectations, overall business
- 19 May 2023SATS: Deep dive into WFS and re-evaluating SATS’s valuation
Our Views
Growth in global air cargo volumes and sustained strength in global air passenger traffic to drive earnings momentum. The global air cargo market has returned to growth, and we foresee the group’s ground handling and in-flight catering businesses benefitting from the global rebound in air travel. Moreover, SATS’s non-travel-related food business should also register healthier growth, underpinned by its expanding product portfolio and customer base, and increased production capacity and footprint. The acquisition of WFS should also start yielding operational and financial synergies over the next few years. We project SATS’s core EPS to reach 20.9Scts in FY26F, representing 93% of FY19’s level.
Successful integration and realisation of synergies from WFS are critical to drive a re-rating. SATS has completed the refinancing of WFS’s costly debt, with meaningful interest savings to materialise from FY25F. More importantly, the market will be paying attention to the assimilation of WFS and whether the group can achieve its intended operating synergies (SGD51mn/SGD100mn of operational synergies realised thus far) within its projected timeline, to justify the hefty price tag on WFS.
Maintain BUY with TP of higher TP of SGD4.10. Despite the stock’s strong performance YTD, we continue to be positive on its growth narrative and see further upside from hereon. Our blended valuation framework incorporates both a forward EV/EBITDA multiple (pegged to 8.3x blended FY25/26F EBITDA) and discounted cash flow valuation.
Risks
Research Platform: Insights Direct
GENERAL DISCLOSURE/DISCLAIMER
The information herein is published by DBS Bank Ltd and/or DBS Bank (Hong Kong) Limited (each and/or collectively, the “Company”). This report is intended for “Accredited Investors” and “Institutional Investors” (defined under the Financial Advisers Act and Securities and Futures Act of Singapore, and their subsidiary legislation), as well as “Professional Investors” (defined under the Securities and Futures Ordinance of Hong Kong) only. It is based on information obtained from sources believed to be reliable, but the Company does not make any representation or warranty, express or implied, as to its accuracy, completeness, timeliness or correctness for any particular purpose. Opinions expressed are subject to change without notice. This research is prepared for general circulation. Any recommendation contained herein does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. The information herein is published for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate legal or financial advice. The Company, or any of its related companies or any individuals connected with the group accepts no liability for any direct, special, indirect, consequential, incidental damages or any other loss or damages of any kind arising from any use of the information herein (including any error, omission or misstatement herein, negligent or otherwise) or further communication thereof, even if the Company or any other person has been advised of the possibility thereof. The information herein is not to be construed as an offer or a solicitation of an offer to buy or sell any securities, futures, options or other financial instruments or to provide any investment advice or services. The Company and its associates, their directors, officers and/or employees may have positions or other interests in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking or financial services for these companies. The information herein is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of or located in any locality, state, country, or other jurisdiction (including but not limited to citizens or residents of the United States of America) where such distribution, publication, availability or use would be contrary to law or regulation. The information is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction (including but not limited to the United States of America) where such an offer or solicitation would be contrary to law or regulation.
This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) which is Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. DBS Bank Ltd may distribute reports produced by its respective foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Singapore recipients should contact DBS Bank Ltd at 65-6878-8888 for matters arising from, or in connection with the report.
DBS Bank Ltd., 12 Marina Boulevard, Marina Bay Financial Centre Tower 3, Singapore 018982. Tel: 65-6878-8888. Company Registration No. 196800306E.
DBS Bank Ltd., Hong Kong Branch, a company incorporated in Singapore with limited liability. 18th Floor, The Center, 99 Queen’s Road Central, Central, Hong Kong SAR.
DBS Bank (Hong Kong) Limited, a company incorporated in Hong Kong with limited liability. 13th Floor One Island East, 18 Westlands Road, Quarry Bay, Hong Kong SAR.