SATS

SATS: Strong 2Q12 results, which was at the higher end of estimates. Rev at $461.5m, +8.8% yoy and +5.4% qoq, while net profit at $50.3m, +25.4% yoy and +21.8% qoq. Strong rev was led by higher rev contributions from both gateway services and food solutions, whose growth outpaced cost increases and JV continues to contribute steadily to the bottomline. Rev from gateway services, +7.9% yoy to $161.6m, driven by growth in flight vol in SG as well as higher vol recorded by SATS HK. Food solutions rev ex-TFK, +7.7% yoy to $208.4m due to higher inflight meal vol in SG. TFK’s rev improved 13.2% to $90.1m on the back of a rebound in passenger traffic following the Mar11 disasters. In 2Q13, the number of flights handled by SATS increased 5.5% yoy while unit services handled grew 6.1%, underpinned by an increase in services provided to bigger aircraft compared to a year ago. The number of passengers handled rose 4.9% in the quarter to nearly 10m. Gross and unit meals increased by 6.1% and 5.6% respectively, reflecting the passenger traffic growth momentum at Changi Airport. Going forward, grp expect the growth momentum in its food business to continue, underpinned by the seasonal uplift in 3Q, and continued management of raw material costs. Grp is proposing a div per share of 5c for 1H13. Deutsche maintains Buy with $3.05 TP Nomura maintains Buy with $3.10 TP Maybank-KE maintains Buy with $3.22 TP UOB Kay Hian maintains Sell with $2.64 TP Citi maintains Sell with $2.35 TP UBS neutral with $2.63 TP