Brokers' take

SATS Ltd > Hold (downgraded) DBS Group Research, July 19 July 19 close: S$5 Target price: S$5

OPERATING margin outlook is less optimistic on weak cargo volumes and consolidation of lower margin Ground Team Red's (GTR) financials. We lower our earnings forecasts by 5-9 per cent to reflect less optimistic operating margins, thus reducing our earnings growth to 2-3 per cent, and target price to S$5.00. With limited upside for the stock, we downgrade our recommendation to "hold".

We are now neutral on the stock. We expect lower margins and earnings growth going forward, led by a weak cargo outlook and consolidation of lower margin GTR operations.