SATS

SATS: Foray into Saudi is good, but not good enough
-SATS won tender to build and operate a new $40m cargo terminal in Saudi Arabia for 22.5 years.
-Maybank KE believes the expansion will add another growth dimension to the group
-Also opens opportunity for SATS to pursue passenger handling and inflight catering services in long term
-But this greenfield project is seen as riskier than group's previous expansion - mostly JVs and brownfield
-Assuming project at max capacity, earnings contribution to group may not be significant
-Recent strong price rally is stretching valuations - 22x FY17e P/E
-Maybank KE maintains the only Sell rating on the street with TP of $3.76