SATS

UOBKayhian on 23 Jan 2014

FY13F PE (x): 18.1
FY14F PE (x): 17.3

Marginal yoy decine in 3QFY14 revenue. We estimate revenue from gateway services to rise 5.7% yoy on the back of a 6.6% yoy rise in unit services. However, revenue from food solutions is expected to fall 4.1% yoy on a 5.7% yoy decline in unit meals and potentially lower revenue from Japanese subsidiary TFK due to a weak yen and ongoing Sino-Japanese tensions. Maintain HOLD and target price of S$3.24. We value SATS on a DDM basis (required return: 7.0%, terminal growth 1.5%). At our fair value, the stock offers a dividend yield of 5.0%. Suggested entry price is S$3.10.