Brokers' take

SATS Ltd > Hold OCBC Investment Research, Nov 9 Nov 9 close: S$4.88 Target price: S$5.39

SATS Ltd delivered a 4.2 per cent year-on-year (yoy) rise in revenue to S$453.1 million and a 9.0 per cent decrease in net profit to S$65.7 million in Q2 FY19. Trade tensions and weaker sentiment have impacted emerging market currencies and trade volumes. At the same time, higher oil prices and competition in the airline industry should continue to result in pricing pressures on SATS.

Notwithstanding the short term challenges, the longer term outlook remains positive with aviation volumes and demand for safe, quality food set to increase. Meanwhile, the share price has appreciated by about 4 per cent versus the STI's 2 per cent fall since our upgrade to "buy" in mid Sept. With the limited upside potential, we downgrade our rating to "hold".