"Despite the recent rally, SATS is trading at an attractive 21x FY2027 P/E with a 1.5% dividend yield," says Liu.
Sats, according to Liu, has reaffirmed it is on track to achieve its FY2029 targets of revenue exceeding S$8 billion, EBITDA margin of at least 20% and ROE of 15%, supported by sustained market share gains in air cargo, improving utilisation across food solutions network and selective inorganic expansion into new cargo hubs.
She notes that cargo volumes have outperformed IATA for 10 consecutive quarters, underpinned by Sats's extensive global network and exposure to resilient technology and e-commerce flows. Liu expects FY2027 cargo volume to grow at 5% while the rate maintains.
Liu believes that the company's next earnings growth leg will shift from cargo to catering.
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Beyond traditional inflight catering, the company is seen to grow its ready-to-eat and fresh frozen meals segment.
She notes that the company's Thailand central kitchen, scheduled to commence operations in October, will centralise frozen meal production, improve utilisation across the group's regional kitchen network.
Liu expects food solutions to make a more meaningful earnings contribution from FY2027 onwards, with margin expansion to follow as production scales and operating leverage improves.
See also: OCBC's Lim downgrades Sats to 'hold' following recent gains
"While the shares have surpassed their pre-Iran conflict levels, we believe the re-rating is fundamentally driven, supported by resilient cargo demand, the scaling of food solutions business and improving operating leverage," she says.
Sats shares as at 9.53 am, traded at $4.49, down 0.88%.
