Stock Analysis: SATS | Lianhe Zaobao
Daiwa Capital Markets recommends buying SATS, with a target price of 4.20 yuan and a closing price of 3.34 yuan. SATS reported impressive performance in the second quarter of the fiscal year 2026, with cargo revenue increasing by 14.3% year-on-year and cargo throughput rising by 7.1% year-on-year, exceeding IATA expectations. The group's global network has demonstrated resilience amid the trade war, continuously expanding its market share. Net leverage has decreased to 61.4%, and it is expected to prioritize debt reduction in the near term. Daiwa Capital Markets has raised its earnings forecast for the fiscal years 2026 to 2028 by 6% to 11%
SATS
- Recommendation: Buy
- Target Price: 4.20 CNY
- Closing Price: 3.34 CNY (-1.48%)
SATS reported impressive results for the second quarter of the fiscal year 2026, with strong freight performance showcasing the resilience of the group's global network.
The group's performance for the second quarter ending in September exceeded our expectations, primarily due to stronger-than-expected freight business. Freight revenue grew by 14.3% year-on-year, demonstrating resilience amid the turmoil of the tariff wars.
The group's cargo throughput achieved a year-on-year growth rate of 7.1%, significantly higher than the International Air Transport Association (IATA)'s forecast of a 4.2% increase in global air freight volume. This also indicates SATS's continuous expansion of its market share in the global air freight market.
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We believe SATS will continue to prioritize debt reduction in the near term, and we have seen good progress in this regard, with the group's net leverage (excluding lease liabilities) having decreased to 61.4%.
The group's management remains committed to achieving its growth targets for the fiscal year 2029, maintaining a positive outlook for the future. We have raised our earnings forecasts for the group for the fiscal years 2026 to 2028 by 6% to 11%. (UOB Kay Hian)
