What’s next for SATS shares?

• SATS Ltd (SGX: S58) share price fell to S$3.90 on Tuesday (26 July 2022)
• The flight ground handler reported a core net loss of S$22.5 million in Q1 of FY2023
• CIMB analysts expects losses to ‘narrow more significantly’ next quarter
• Keen to trade SATS shares? Open an account with us to start today.

SATS stock price: what’s the latest?

SATS shares fell over 2% at the start of the week, following the release of its latest quarterly business update.

Despite the drop, the blue-chip counter remains up by approximately 1.3% year-to-date.

In terms of stock outlook, the latest analyst sentiments published by SGX StockFacts show a consensus rating of around ‘outperform’, alongside a price target of S$4.27 on the stock.

The price target equates to a 9.5% upside potential from SATS’ last traded price of S$3.90.

CIMB’s equity research team kept its ‘add’ call on the stock in its latest research note, but lowered price target to S$4.47 from S$4.88.

The analysts noted that the ground handler’s core net loss of S$22.5 million missed its estimates as operating cost gains ‘outstripped revenue recovery’.

As such, CIMB has cut its FY2023 earnings per share (EPS) for SATS by 64.4%, while expecting losses for the second quarter (Q2) of FY2023 to ‘narrow more significantly’.

How did SATS fare in Q1 FY2023?

The aviation service provider saw revenue increase S$99.9 million (36.2%) year-on-year (YoY) to S$375.5 million in its first quarter business update for FY2023.

This came on the back of travel recovering to 55% of pre-pandemic flights, as well as the inclusion of Asia Airfreight Terminal’s revenue of S$32.4 million from March 2022.

By segment, revenue from Food Solutions increased 26.4% or S$38.9 million YoY to S$186.2 million, while revenue from Gateway Services grew 49.1% or S$62.3 million YoY to S$189.3 million.

The group reported an operating loss of S$34.3 million this quarter, down by S$37.8 million from an operating profit of S$3.5 million reported a year ago, as it mobilised more resources ahead of full aviation recovery coupled with lower government reliefs.

SATS’ profit attributable to owners of the company (PATMI) amounted to a net loss of S$22.5 million. Excluding government reliefs, its PATMI would have been a loss of S$31.9 million for the period.

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