SATS

SATS Services: UOB Kay Hian maintains Sell with $2.40 TP. House note that Flight Cancellations On China-Japan Routes A Cause For Concern. Add that recent outperformance for SATS has been driven by strong pax traffic numbers. However, the market has not factored in the detrimental impact to SATS’s Japanese inflight catering subsidiary, TFK due to the ongoing spat between China and Japan, which has led to flight cancellations. These in turn will lead to lower inflight meals and losses for TFK in the key 2H period.