SATS

SATS: 4QFY14 results missed estimates, as net profit lowered 7.8% y/y to $42.6m, while revenue slipped 3.2% to $434.6m, weighed to continued manpower cost pressure, further exacerbated by poorer performance from gateway associates/JV (-46%) due to lower cargo volumes and higher staff costs. Meanwhile, top line was affected by translation loss on the weakening JPY and decreased unit meal volumes (-6.3%) after Qantas moved its hub for European flights to Dubai, partially mitigated by the modest growth in flights (+6.7%) and airfreight (+4.4%) handled. FY14 earnings of $180.4m (-2.4%) missed street estimates by 8%, while revenue of $1.79b (-8%) missed by 2.2%. Final DPS of 8¢ declared, bringing FY14 total DPS to 13¢ (FY13:15¢). On the outlook, management expects operating landscape to remain challenging from rising costs and ongoing pressure in regional aviation, while they expect moderate growth in passenger traffic and marginal growth in airfreight. Latest broker ratings: OCBC maintains Hold with TP of $3.35 under review