SATS: The Straits Times interviewed managing director of competitor, Aircraft Service International Group (ASIG). As background, ASIG was awarded a 10-yr licence in Jun11 to offer passenger, baggage and cargo handling services at Changi Airport. The article confirmed suspicion that ASIG has not secured any customer so far, despite having approached 20 airlines at Changi Airport.
ASIG admitted breaking into the mkt has been tougher than anticipated but remained upbeat about prospects. Co is apparently in serious discussions with a few airlines and further stated it will not compete purely on costs, which should be positive for the sector.
Despite ASIG's relative lack of success so far, Deutsche acknowledge competition risks persist and believe price could remain a key lever for ASIG. But believe SATS will maintain its mkt position and retain its higher-quality airline customers, with subsequent support to its domestic aviation revenues.
Deutsche maintains Buy with $2.96 TP.
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