SATS

SATS: TFK’s contribution to SATS has been lackluster since it was acquired in 2010, but this could be traced back to meal volumes resultant from uninspiring air traffic growth in Japan following the 2011 Tohoku earthquake, rising Sino-Japanese tensions since 2012 and falling JPY, which dented TFK’s SGD translated contributions. That said, Maybank KE highlights that positive developments are knocking at the door: 1) Rise in China visitation numbers to Japan 2) Steady growth in Japan Airlines international traffic 3) Expanding customer base. Longer term outlook also appears to be bright, with additional international slots at Haneda Airport and Japan’s continued emphasis to promote local tourism industry. A potential regional air services agreement between Japan and ASEAN would give a new flip to air traffic and hence, meal volumes at TFK. Maybank KE reiterates that SATS is still the proxy for structural trend in rising air traffic in the region, and reiterates Buy with TP $3.47.