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Analysts mixed on SATS despite potential Covid-19 vaccine, air travel bubble

Jeffrey Tan
Jeffrey Tan • 2 min read
Analysts mixed on SATS despite potential Covid-19 vaccine, air travel bubble
DBS Group Research reckons that a recovery to pre-Covid-19 levels for international air travel could occur in 2022.
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Analysts are divided on the prospects of SATS despite positive news for the aviation industry.

On Nov 9, Pfizer and BioNTech reportedly developed an experimental Covid-19 vaccine that is more than 90% effective in eliminating the virus.

Two days later, Singapore announced it will begin air travel bubble flight with Hong Kong on Nov 22.

DBS Group Research reckons that a recovery to pre-Covid-19 levels for international air travel could occur in 2022.

As such, the brokerage expects the stock to re-rate and normalise ahead of vaccine approval in 2021.

“We anticipate at least one effective vaccine will be commercialised in 2021 (FY22) and start to drive a gradual recovery in international air travel,” DBS analyst Alfie Yeo and Andy Sim write in a note dated Nov 13.

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However, CGS-CIMB Research is less than optimistic.

While the brokerage believes that the downside risk for SATS is limited, the speed of its recovery still depends on the relaxation of travel restrictions.

“We have factored in a revenue recovery to 70% of pre-Covid-19 levels by FY22 and 80% for its associates,” CGS-CIMB’s head of research Lim Siew Khee writes in a Nov 13 report.

DBS has maintained its “buy” rating for the stock with a higher target price of $4.02 from $3.66 previously.

CGS-CIMB Research, on the other hand, has retained its “hold” recommendation for the stock, albeit with a higher target price of $3.27 from $3.00 previously.

As at 1.50 pm, SATS was up 15 cents or 4% at $3.95 with 3.8 million shares changed hands.


See:SIA gets a lift from potential Covid vaccine and travel bubble but recovery still nascent

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