Where do analysts see the SATS share price going next?

Shares of Singapore aviation ground handling operator SATS continue to trade well below their 2020 peak.

As at 10:45 SGT on Thursday 18 June 2020, the company’s equities are being offered at S$3.19 apiece, based on the latest IG data.

This is nearly 38% below the highest traded price of 2020 so far of S$5.12 a share, achieved on 02 January – the year’s very first trading session. It is also roughly 41% lower than a 52-week high of S$5.43 a share, posted on 16 July 2019.

What’s the story behind SAT’s recent share price trajectory?

Since our last update, SATS’ share price has fallen further, with intermittent rises in between.

Between 30 April 2020 and 15 May 2020, the aviation services company’s market valuation plummeted 15%, as regional and global socio-political events shook investor confidence everywhere.

As an indicator – on Friday 22 May 2020, Singapore’s blue-chip stock benchmark Straits Times Index (STI Index) fell over 2% after it was reported that China’s rubber stamp parliament National People’s Congress would meet on Friday to debate a national security law that has been widely described as ‘controversial’.

The proposed law, which has since been passed in a bid to ban secession, foreign interference, "terrorism" and all seditious activities targeting the Chinese central government, has been widely described as Beijing’s response to the 2019 Hong Kong protests.

Conflicting reports on Covid-19 trial results by various US drug makers, also took stock markets – not just Singapore’s – on a rollercoaster ride.

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SATS’ share price soared 29% in early June

However, the stock experienced a massive price recovery between 01 June and 08 June, as it surged over 29% during this period, as investor sentiments picked up with businesses being allowed to reopen following months of movement restrictions and lockdowns.

Singapore also entered a so-called ‘phase-one’ of its lockdown easing on 02 June 2020. As part of this initial reopening phase, more schools, offices and businesses – including those in the manufacturing and services sector – were the first to resume operations.

SATS was the second best performing large capitalisation stock on the STI Index that week, with its share price rallying a bumper 19.2%.

Despite new concerns over a second wave of Covid-19 infections, interspersed with sprinklings of optimism via the US Federal Reserve’s new bond purchase plan, not much has changed since then, with shares trading sideways for the most part along a median point of S$3.25 per share.

Where do analysts see SATS going from here?

DBS equity researchers at the start of June raised their stock rating on SATS to a ‘hold’ from ‘negative’, and 12-month share price target to S$2.64 a share, up from S$2.61 previously.

They upgraded their view as they as do not envision ‘further downside on the stock’ with Singapore now easing its lockdown restrictions and allowing passengers to transit through Changi Airport from 02 June.

They wrote that this is positive for SATS, and should put the company on the path to an earnings recovery in the 2020 financial year, barring another widespread outbreak.

However, they cautioned that they preferred to take a neutral stance on the aviation stock as the outlook for regional aviation remains muted as regional travellers remain cautious.

CIMB analysts, on the other hand, had rated the stock a ‘reduce’ alongside a share price target of S$2.56 per share.

They had stated that they ‘still expect SATS to be in a loss’ of roughly S$100 million this year, despite an estimated S$140 million in Job Support Scheme funding to be received by the firm. The funding amount is based on 5500 qualifying Singaporean/Permanent Resident staff at an average salary of S$3,400 a month for 10 months.

How to trade SATS shares with IG

Are you feeling bullish or bearish on SATS Ltd and other SGX stocks? Either way you can buy (long) or sell (short) the asset using derivatives like CFDs offered on IG's industry-leading trading platform in a few easy steps:

• Create a live or demo IG Trading Account or log in to your existing account
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