SATS

SATS: +2.1% to $2.40 in active trade after the company announces sale of its UK non-aviation food business Daniels Group for £151m, which could rise to £159m upon meeting certain EBITDA targets.

DMG notes the price is $23m over the NAV of the divested units, but after factoring forex translation and expenses, the sale will result in a $4.7m loss. Following this transaction, SATS will once again be dominated by Spore sales contributing more than 90% of group revenue. However, balance sheet will be strengthened with the disposal of the UK business, with net cash of over $400m.

Adds that 2QFY12 operating data continue to exhibit a positive trend, with higher flights handling and passenger volume boosted by rising popularity of low cost carriers. House likes SATS for its cash-generative attributes and leverage to the growth of LCC sector and has a target price of $2.53.

Technicals are however, heavily overbought at these levels and stock may undergo a pullback before resuming its uptrend.