Brokers' take

SATS | Buy Target price: S$5.34 Nov 29 close: S$4.68 OCBC Investment Research, Nov 29

Post our downgrade on Nov 9 and the release of its Q2 FY2019 results, the share price of SATS has dropped by 9.1 per cent compared to the Straits Times Index's 0.2 per cent fall over the same period, based on the closing price on Nov 28. But now, with the recent correction, value is emerging again.

The company has been steadily increasing its dividends over the years since FY2013, backed by an average 6 to 7 per cent earnings growth per year since then. Dividends paid over the past five years range from S$145 million to S$190 million, backed by operating cash flows of ranging from S$275 million to S$330 million per year. Investing cash flows have averaged S$135 million per year over the past five years. This shows ample cushion for dividends to be sustained, and sufficient room for investments. Expected dividend is about 4.1 per cent for the stock.