SATS

SATS: SATS is trading at a 52-week high, and its valuation is near its peak of +1 s.d of its historical valuations or 19x forward P/E. this last occurred during the pre-GFC boom in 2008 and yield stocks craze in 2013.

SATS’s share price has surged 19% since Apr 15, thanks to 1) rebates for ground handling and catering fees in Changi Airport, 2) strong 4Q15 results and decent 9 cents final DPS (to be paid on 21 July), and 3) resumption of contract with Jetstar after airline terminated its contract with ASIG in early June, and 4) potential turnaround in its Japanese subsidiary, TFK due to recent $325m contract from Delta Airlines.

CIMB believes news of higher volume growth and cost savings has been fully-priced in. The house downgrades its rating from ADD to HOLD with TP: $3.60.