Date: October 10, 2024
Broker: CGS International Securities Pte. Ltd.
Company Overview
SATS Ltd is a leading provider of food solutions and gateway services, primarily serving the aviation industry. The company is expected to continue its growth trajectory, returning to pre-Covid profitability levels by FY25F.
Q2 FY25F Profit Outlook
- Estimated Core Net Profit: S$62 million to S$65 million
- This represents a 7%-12% quarter-on-quarter growth in profit for Q2 FY25F, indicating strong momentum in revenue and profitability.
Earnings and Profitability Forecast
The company’s earnings are expected to rise due to stronger revenue momentum and a favorable tax rate, partially offsetting higher operational expenditures. The broker has raised the EPS forecast for FY25F-FY27F by 7.6%-14.7%.
Return to Pre-Covid Profitability
SATS Ltd is expected to return to its FY19 pre-Covid levels of profitability by FY25F, marking a significant recovery in the company’s operations and financial performance.
Valuation and Target Price
- DCF-based Target Price: S$4.40
- This target price is based on a weighted average cost of capital (WACC) of 10.4%.
Investment Recommendation
The broker reiterates an “Add” recommendation for SATS Ltd, suggesting a positive outlook for the company over the next 12 months based on its strong earnings potential.
Analyst Contact
Source: CGS International Securities Pte. Ltd.
