SATS downgraded by CGS-CIMB after earnings miss slightly

Singapore Changi Airport Terminal 4 departure boardSingapore Changi Airport Terminal 4 departure board

CGS-CIMB downgraded SATS to Hold from Add, advising waiting for a lower entry point.

The share price is trading at 22 times 2020 price-to-earnings, above its average of 17.9 times for the 2006-2019 period, the brokerage said in a note Friday.

CGS-CIMB said it would look to accumulate the shares at levels under S$5.00, or if SATS makes a “sizable earnings accretive M&A announcement.”

SATS’s fiscal first-quarter net profit dropped 14.4 percent on-year to S$54.7 million amid the Jet Airways suspension, lower foreign-exchange gains and lower cargo volumes amid trade uncertainty, the aviation catering company reported Thursday.

The brokerage said net profit came in slightly below its forecast for S$60 million, marking around 21 percent of its full-year forecast, amid higher depreciation from changed accounting methods for leases and on the Jet Airways grounding.

CGS-CIMB kept its target price on SATS at S$5.40.

SATS shares were down 6.01 percent at S$5.00 at 4:22 P.M. SGT.

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