Japan, China dispute to hurt SATS profits - UOB

Stock Name: SATS
Company Name: SATS LTD.

Research House: UOB KayHian

Price Call: SELL

Target Price: 2.40

Airline services company SATS will be hurt by flight cancellations on China-Japan routes, which the market has not factored in yet, UOB Kay Hian said, and lowered its target price on the stock to $2.40 from $2.42.

At 10:37 a.m., SATS shares were down 1.4% at $2.73. They have gained nearly 27% since the start of the year, compared with the 23% gain in the FTSE ST Industrials Index.

SATS’ 51 percent-owned Tokyo Flight Kitchen derives 60% of its revenue from Japan Airlines, which has suspended some of its flights between Japan and China due to an ongoing territorial dispute, UOB said. It maintained its ‘sell’ rating on SATS stock.

The brokerage has cut its growth assumptions for TFK and reduced its 2013 net profit forecast by 4% to $164.4 million.