The outlook is positive. Passenger traffic growth is expected drive volume growth and offset the pricing pressure from airlines. SATS is also investing in new central kitchens in China to supply fast casual restaurant chains in key cities. The expectation of volume growth is driven by aviation demand and demand for quality food. Potential risk factors include challenges arising from trade tensions impacting cargo volumes and airline pressure from fuel costs.
Maintain Accumulate; unchanged target price of $5.47
We like the stock for its regional expansion story and growth initiatives. The strong cash flow generating business makes the 3.6% dividend yield sustainable. Our target price gives an implied FY19e forward P/E multiple of 24.6 times.