SATS

SATS: ($3.07) Raising exposure to Indonesia SATS is acquiring a 41.65% stake in Indonesia-listed PT Cardig Aero Services (CAS) for ~$118m in cash, valuing the Indonesian food solutions and gateway services provider at 21.5x CY14e P/E. According to SATS, CAS is the leading player in the Indonesia aviation market with major int’l airlines such as SIA, as its customers. SATS has over 10 years of working relations with the CAS management, through its 49.8% owned associate PT JAS, which is CAS’ largest customer (73% of CAS’ sales). The deal will give SATS a better foothold in Indonesia - one of the most fastest growing aviation markets in Asia. While SATS would not get management control, it will be in a better position to drive the strategy and operational efficiency of CAS. While some observers highlight that the deal price is on the high side (50% premium to last VWAP), Maybank-KE views the acquisition positively, as it will still add ~3% to its FYMar15-16e earnings. Meanwhile SATS can comfortably fund this acquisition with its war chest of $355m. The house reiterates its Buy rating with TP $3.47.