SATS (S58.SG) +1.8% at $2.84 vs STI +0.7, likely getting lift from Nikkei report company in final negotiations to buy Japan Airlines’ in-flight catering subsidiary, TFK Corp.
UOB KayHian, which has Buy rating, $3.07 target, says “SATS already has strong exposure to north Asia and if it manages to acquire TFK, it will reap substantial synergy and cement its status as Asia’s leading in-flight caterer.”
Adds, if reported Y10 billion buy price correct, would translate to around 0.5x sales, even 49% stake would be attractive 1x sales; SATS currently trades at 1.8x sales.
“If deal goes through, SATS would be re-rated upwards, could command a higher valuation than the ascribed 16x P/E.” SATS spokesman couldn’t be reached for comment; intraday high of $2.85, also 30-day moving average may cap for now; any further upside likely to hinge on confirmation of deal talks, pricing, likely synergies.
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