SATS: (S$4.17) Engaging in a damaging price war with competitor
- Price war has emerged between SATS and Dnata with rates falling by as much as 30%
- Price war has triggered aggressive negotiations by airlines when their contracts come up for renewal
- As such Maybank-KE notes that there is risk that rates could decline faster than productivity improvement
- Any earnings disappointment could result in the market punishing SATS particularly due to its current rich valuations
- Valued at 14.6x FY16F EV/EBITDA, 30% premium over recent sale pricing of Swissport to HNA Group (10.9x FY15 EBITDA)
- Last call on SATS: Sell, TP: $3.76
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