Lim believes investors are showing appreciation for Sats’ strong FY2026 results and sentiment has improved amid progress towards ending the conflict in the Middle East.
“Sats is now trading above pre-Iran War levels, and while we acknowledge the incremental positives arising from a potential resolution, we also note that a peace deal does not imply an immediate return to pre-war normalcy,” she warns.
For now, she is keeping her estimates for the company ahead of its 1QFY2027 business update. Her fair value of $4.20 is pegged to 20 times FY2027 earnings.
“Nonetheless, we remain constructive on the company’s long-term outlook, supported by resilient air cargo demand and an extensive global network post-acquisition of Worldwide Flight Services,” says Lim, referring to the transformational acquisition made by Sats to broaden its reach from one focused on ground-handling and catering to cargo-handling.
See also: SGX enjoys higher target prices again with volume surge
She notes that Sats has laid down targets to grow its total revenue to more than $8 billion by FY2029, and a target ebitda margin of at least 20% and return on equity of at least 15%, respectively.
“Much will be dependent on management’s ability to execute, in our view, especially amidst global trade uncertainty, and we keep an eye out for Sats’s growth trajectory in subsequent quarters for further re-rating catalysts,” says Lim.
Separately, Liu Miaomiao of Maybank Securities, citing greater confidence in management’s ability to deliver its FY2029 financial targets as multiple growth drivers become increasingly visible, has raised her target price for Sats from $4.52 to $5.09.
See also: Analysts stay positive as ThaiBev’s beer IPO remains in the works
From her perspective, the stronger growth prospects warrant a lower execution risk premium. As such, she has lowered her WACC from 10.6% to 10% and, taking into account the “meaningful” contribution from Sats’ central kitchen in Thailand, she has raised her FY2026 earnings estimates by 2.5% and her FY2027 estimates by 9.7%. “Despite the recent rally, Sats is trading at an attractive 21 times FY2027 P/E with a 1.5% dividend yield,” says Liu.
She notes that cargo volumes have outperformed IATA for 10 consecutive quarters, underpinned by Sats’ extensive global network and exposure to resilient technology and e-commerce flows. Liu expects FY2027 cargo volume to grow at 5% while the rate remains.
Liu believes that the company’s next earnings growth leg will shift from cargo to catering.
Beyond traditional in-flight catering, the company is seen as growing 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 and 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.
“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.
Roy Chen of UOB Kay Hian has also turned more bullish on this stock. In his July 2 update, he raised his target price from $4.75 to $5, citing factors such as growing cargo volumes.
Chen likes Sats for its good progress in deleveraging its balance sheet from 90% right after the acquisition of WFS to just 55% as at the end of its FY2026. “This has provided Sats more flexibility to enhance shareholder returns by potentially raising dividend and/or making bolted-on acquisitions,” he says.
