Singapore Stock Market News

SATS Ltd - Perked up

StockFanatic
Publish date: Mon, 27 Apr 2015, 03:32 PM
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Passenger travel could be spurred by Changi Airport's reduced charges for selected travellers, airlines and ground handlers amidst stiff competition from Hong Kong, Seoul and Middle East airports. SATS could benefit from 20% lower ground handling and catering fees from May onwards. We raise FY16-17 EPS by 5% for potential cost savings from licensing fees and better margins as SATS is investing in the automation of its processes. We upgrade the stock from hold to Add with a higher target price of S$3.31, based on 17x CY16 P/E (its 5-year average). With high operating costs being gradually addressed, we like SATS for its strong balance sheet with net cash of c.S$250m and 5% dividend yield.
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