20140220-Maybank_KERPL-Raises_exposure_to_Indonesia_11页_1mb

SATS (SATS SP) Summary

Core Information

• Share Price: SGD3.07
• Target Price: SGD3.47 (+13%)
• Market Cap (USD): 2.7B
• ADTV (USD): 3M
• Sector: Aviation
• Country: Singapore
• Investment Recommendation: BUY (unchanged)
• Source: Maybank KE, Bloomberg consensus, SATS, CAS

Acquisition of PT CAS

• Stake Acquired: 41.65% in PT Cardig Aero Services (CAS)
• Purchase Price: IDR1,108B (approximately SGD118.3M)
• Price per Share: IDR1,275
• Implied Premium: 50.1% over one-day volume weighted average price (VWAP)
• Expected Completion Date: 20 February 2014
• CAS Overview: Leading aviation service provider in Indonesia, with major international airline clients including Singapore Airlines.
• JAS Relationship: SATS owns 49.8% of JAS, which is a key associate of CAS and offers ground & cargo services across 11 airports in Indonesia.
• Impact on Earnings: Adds approximately 3% to FY3/15E-16E EPS.
• Valuation: Implies a 21.5x CY14E P/E, which is considered reasonable due to positive growth outlook.
• Funding: SATS can fund the acquisition with its SGD355M war chest.
• Valuation of CAS: Implied enterprise value of IDR2,801B.

Financial Highlights

• Revenue (FYE Mar):
  • FY12A: SGD1,685.4M
  • FY13A: SGD1,819.0M
  • FY14E: SGD1,811.0M
  • FY15E: SGD1,901.0M
  • FY16E: SGD1,985.7M
• EBITDA (FYE Mar):
  • FY12A: SGD266.4M
  • FY13A: SGD285.2M
  • FY14E: SGD249.3M
  • FY15E: SGD277.2M
  • FY16E: SGD301.7M
• Core Net Profit (FYE Mar):
  • FY12A: SGD177.5M
  • FY13A: SGD202.0M
  • FY14E: SGD180.5M
  • FY15E: SGD208.1M
  • FY16E: SGD227.4M
• Core EPS (cts):
  • FY12A: 16.0
  • FY13A: 18.2
  • FY14E: 16.2
  • FY15E: 18.7
  • FY16E: 20.4
• Core EPS Growth (%):
  • FY12A: -1.8
  • FY13A: +13.5
  • FY14E: -10.8
  • FY15E: +15.3
  • FY16E: +9.3
• Net Dividend Yield (%):
  • FY12A: 8.5
  • FY13A: 4.9
  • FY14E: 4.6
  • FY15E: 4.9
  • FY16E: 5.2
• ROAE (%):
  • FY12A: 11.0
  • FY13A: 13.0
  • FY14E: 12.0
  • FY15E: 13.5
  • FY16E: 14.2
• ROAA (%):
  • FY12A: 8.0
  • FY13A: 9.8
  • FY14E: 9.0
  • FY15E: 10.2
  • FY16E: 10.8
• EV/EBITDA (x):
  • FY12A: 9.0
  • FY13A: 11.2
  • FY14E: 13.4
  • FY15E: 12.0
  • FY16E: 10.9

Valuation Metrics

• P/E (reported):
  • FY12A: 18.8
  • FY13A: 18.5
  • FY14E: 19.1
  • FY15E: 16.4
  • FY16E: 15.0
• Core P/E (x):
  • FY12A: 19.2
  • FY13A: 16.9
  • FY14E: 18.9
  • FY15E: 16.4
  • FY16E: 15.0
• P/BV (x):
  • FY12A: 2.3
  • FY13A: 2.4
  • FY14E: 2.4
  • FY15E: 2.3
  • FY16E: 2.2
• P/NTA (x):
  • FY12A: 2.6
  • FY13A: 2.8
  • FY14E: 3.0
  • FY15E: 2.9
  • FY16E: 2.8
• Implied P/E (FYE Dec):
  • FY11: 40.4
  • FY12: 30.4
  • FY13E: 24.9
  • FY14E: 21.5
  • FY15E: 17.1
• Implied EV/EBITDA (x):
  • FY11: 12.5
  • FY12: 9.6
  • FY13E: 8.6
  • FY14E: 7.0
  • FY15E: 5.7

Key Financials (IDR b, FYE Dec)

• Revenue:
  • FY11: 804
  • FY12: 1,006
  • FY13E: 1,242
  • FY14E: 1,649
  • FY15E: 2,096
• EBITDA:
  • FY11: 223
  • FY12: 291
  • FY13E: 324
  • FY14E: 398
  • FY15E: 494
• PATMI (SGD m):
  • FY14: 181
  • FY15: 208
  • FY16: 227
• Implied Net Income of Acquired Stake (IDR b):
  • FY11: 27.4
  • FY12: 36.5
  • FY13E: 44.6
  • FY14E: 51.6
  • FY15E: 65.0
• Implied Net Income of Acquired Stake (SGD m):
  • FY11: 2.9
  • FY12: 3.9
  • FY13E: 4.8
  • FY14E: 5.5
  • FY15E: 6.9

Strategic Implications

• Growth in Indonesia: The acquisition enhances SATS's exposure to Indonesia, a fast-growing market.
• Traffic Growth: Increased air traffic between Singapore and Indonesia since the bilateral air service agreement.
• Synergy: Leveraging existing partnership with JAS, which operates across 11 airports, to grow scale and improve connectivity.
• Customer Base: CAS serves major international airlines, including Singapore Airlines, and offers services in food solutions and gateway services.

Key Ratios

• Dividend Cover (x):
  • FY12A: 0.6
  • FY13A: 1.1
  • FY14E: 1.2
  • FY15E: 1.3
• Current Ratio (x):
  • FY12A: 3.1
  • FY13A: 2.5
  • FY14E: 2.3
  • FY15E: 2.4
  • FY16E: 2.4
• Debt/EBITDA (x):
  • FY12A: 0.6
  • FY13A: 0.5
  • FY14E: 0.5
  • FY15E: 0.5
  • FY16E: 0.4
• Net Debt/Equity (%): Net cash for all years.
• FCF Yield (%):
  • FY12A: 3.8
  • FY13A: 6.9
  • FY14E: 4.8
  • FY15E: 5.4
  • FY16E: 5.9

Key Takeaways

• The acquisition of a 41.65% stake in CAS is a strategic move to increase exposure to Indonesia.
• The deal is funded by SATS's available resources and is expected to boost earnings by 3% in the next few years.
• CAS is a leading player in the Indonesian aviation market, with a strong customer base and a good valuation multiple.
• The transaction is expected to enhance SATS's market position and operational scale in the region.