SATS

SATS: 3Q13 results in-line. 3Q13 rev at $470.6m, +6.4%yoy and +2% qoq, and core net profit at $47m, +7.6% yoy and -7% qoq. Result brings 9M13 rev to $1.37b, +9.4% yoy and net profit to $139m, +7% yoy. Results were led by increased flights and higher meal vol led to gateway and food businesses reporting a 6.8% and 6.2% growth in rev respectively. This was however dragged by higher Operating expenditure, +6.3% to $423.8m due mainly to higher staff, raw material and licensing costs incurred, in line with higher business vol. Despite rising costs, the Group earned an operating profit of $46.8m, + 6.8% yoy, although Operating margins remained tight at 9.9%. Share of results of associates and JVs, net of tax rose 31.5% to $12.1m. Going forward, grp remains confident on outlook, noting that Airlines are expecting demand for air travel to improve in 2013 but airfreight demand is likely to remain weak in the coming mths. SATS expects start-up losses for its new businesses in remote catering and cruise handling to continue in the next quarter as budgeted. Amid the uncertain economic environment, labour availability and labour costs in SG are major challenges for Grp, although tip sector to be in a structural recovery with passenger vol expected to hold up steady in intra-Asia traffic with the new terminal in SG and the introduction of the LCCs in Japan, together with the Middle Eastern carriers also increasing their filghts within Asia in 2011 and 2012. Ratings as follows: CIMB Maintains O/p with $3.32 TP Deutsche maintains Buy with $3.05 TP CS neutral with $2.90 TP Maybank maintains Hold with $3.03 TP Citi maintains Sell but raise TP to $2.70