Will SATS share rebound this year?
The aviation ground handler’s market capitalisation has depreciated by over 4% in the last one month, amid rising fuel prices.
- SATS Ltd (SGX:S58) share price closed at S$3.90 on Monday (4 July 2022)
- The aviation service provider’s stock is down by 4.4% in the last one month
- UOB analysts’ latest investment note has SATS at ‘buy’ alongside a price target of S$4.20
- Keen to trade SATS shares? Open an account with us to start today
SATS stock price: what’s the latest?
SATS shares continue to trade along a four-month low price of S$3.90, as concerns over the aviation sector’s recovery escalated in lieu of rising fuel prices.
In terms of outlook, SATS shares have an average rating of just under ‘outperform’ and a consensus price target of S$4.27 as of 5 July 2022, based on the latest SGX StockFacts data.
The price target equates to a 8.7% upside potential from the in-flight and ground handling service provider’s last traded stock price of S$3.90 a share.
How do analysts view SATS listing?
The latest investment thesis came from UOB’s equity research team, who rated the stock a ‘buy’ alongside a lower price target of S$4.20 a share (from S$4.75 before).
‘Our DCF-based target price for SATS has been adjusted lower as we have hiked the weighted average cost of capital applied on SATS by 50 basis points to 7.5% (previously 7.0%),’ wrote analyst Roy Chen.
While SATS is poised to benefit from the regional air travel recovery, Chen cautioned that its near-term earnings performance could be weighed down by cost pressure from a headcount build-up ahead of the business volume pick-up, as well as inflationary pressure on labour and raw material costs.
He added that the stock’s current trading price of S$3.97 (as of 21 June 2022) implies an FY2025 (normalised year) price-to-earnings ratio of 16.6 times, 1.1 standard deviation below its average of 19.9 times during the pre-pandemic years of FY2014-2019.
SATS saw group revenue for its last financial year increase by 21.3% to S$1.18 billion, with net profit attributable to shareholders growing to S$20.4 billion against a net loss of S$79 million the year before.
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