SATs

SATs: Reported 3Q10 Results which were slightly below expectations, with rev at $440.9m, + 1.5%YoY and +9.9%QoQ, while Net Profit at $51.2m, -4.1% YoY and +13.3%QoQ. Rev contributions was due primarily to higher aviation rev, with growth in volumes across all aviation businesses saw the Group’s aviation revenue improve 8.2% to $244.1m. However, this was offset by a 5.7% decline in non-aviation rev at $194.1m due to lower UK sales arising from the continued weakness of the pound...

Operating Margins however dipped slightly to 11.8% vs 13.2%YoY, but +10.2%QoQ on back of higher staff costs and utilities expenses, and a one-off M&A expense of $3.3m. Co. note that share of profits of associated companies/JV company grew 64.5% to $15.3m due mainly to better performance reported by Asia Airfreight Terminal and Beijing Aviation Ground Services. Excluding exceptional items, underlying net profit would have increased 8.6% to $54.5m....

Result brings 9M11 rev to $1224.2m, +6.6YoY and Net Profit at $140.7m, forming 79.5%of FY11 Rev estimates and 78% of Net Profit Conesus estimates. At current price, grp trades at an annualized 16.4x FY11E PE vs its historical average of 13.5x and all time high of 18.8x, suggesting that stock could be fairly valued….

KIM ENG downgrades stock to hold from Buy with $2.93 TP, while BNP Paribas maintains Buy, with $3.23 TP.