The call
SATS Ltd (SGX: S58), the airport ground handling, cargo and inflight catering group, is our pick today. The call is hold, on a 12-month horizon.
The shares closed at S$4.17 on Thursday, 12 November 2026, up 4.25% on the day. That is the latest price going into this morning’s session. Thursday was the first full trading day after the half-year results, released after the market closed on 11 November, and volume of about 16.9 million shares was roughly double the previous session’s.
The 52-week range is S$3.17 to S$4.96. The low came on 20 May 2026 and the high on 6 August 2026. The stock is about 16% below that high, but up about 18% from S$3.54 on 3 November. Most of that came before the numbers: the shares had already risen about 13% to S$4.00 by the close on 11 November. Market value is about S$6.2 billion.
What went right
The September quarter beat expectations. Net profit for the three months rose 2.8% to S$81.1 million and earnings before interest and tax (EBIT) came in at S$145.4 million. DBS Group Research had forecast S$76 million and S$136 million respectively, so both figures were about 7% ahead (DBS, 12 November 2026). CGS International had pencilled in quarterly net profit of about S$75 million, according to a published summary of its 30 October report.
Margins turned up within the half. The group EBIT margin improved to 8.5% in the second quarter from 8.0% in the first, and second-quarter EBIT rose 8.7% from the first quarter (SATS 1H FY2026/27 results, 11 November 2026). DBS says the Food Solutions EBIT margin “held steady q/q at 10.4%”, which it calls “a positive surprise given management’s earlier guidance for greater margin pressure”. The Gateway margin rose 0.2 points to 8.8%.
Cargo is still taking share. Second-quarter volumes rose 8.0% from a year earlier, against global cargo traffic growth of 5.3% measured by IATA. DBS notes this is the 12th quarter in a row that SATS has outgrown the market, with the Americas up 19.4%. Recent wins named by the company include Atlas Air in Amsterdam, renewed contracts with Turkish Airlines and Singapore Airlines at several US and European stations, e-commerce handling for Temu at three stations in the Americas, and a new 25,400 sq m cargo terminal at Lyon-Saint Exupéry Airport.
The top line is healthy. Half-year revenue rose 10.1% to S$3,389.1 million. Gateway Services revenue grew 11.4% to S$2,665.8 million and Food Solutions 5.5% to S$722.5 million. Meals produced rose 9.3% to 60.5 million.
Management also sounded calmer on costs. SATS describes the higher energy-driven operating costs as “transient rather than structural”, and expects the margin impact of higher food input costs to “moderate over time as contractual repricing cycles continue to take effect”. DBS says the cost commentary “appears considerably more positive than in the previous quarter”.
What did not
Look past the quarter and the half is softer. Operating profit for the six months fell 1.2% to S$279.2 million, and the EBIT margin slipped to 8.2% from 9.2%. Second-quarter EBIT was down 7.6% from a year earlier. The company points to higher input costs and Middle East disruption, “including the redirection of flights and cargo”, against a prior year lifted by “tariff-related front-loading”.
The headline profit growth also needs a footnote. DBS says the 2.8% rise in quarterly net profit was “primarily due to the absence of a SGD10mn tax provision” a year earlier, and that profit was down 8.8% excluding that one-off.
Cash flow is what DBS calls “the key blemish”. Free cash flow, after capital spending and lease payments, was negative S$54.8 million in the second quarter, which SATS puts down to the seasonal timing of staff incentive payments. For the six months, free cash flow was negative S$77.3 million, against negative S$1.1 million a year earlier, as operating cash flow fell to S$265.0 million from S$356.8 million. Gross debt to equity rose to 1.48 times from 1.41 times in March (SATS 1H FY2026/27 financial statements). Part of the increase in lease liabilities reflects the renewed 15-year concession for the Asia Airfreight Terminal in Hong Kong.
The interim dividend was held at 2.0 cents. Income from associates and joint ventures fell 13.2% to S$52.6 million, partly on non-recurring provisions in the first quarter.
The numbers behind the call
These measures use Thursday’s close of S$4.17. The calculations are ours unless stated.
| Measure | Value | Basis |
|---|---|---|
| Price to earnings, trailing 12 months | about 21.3 times | 19.6 cents of basic EPS over the 12 months to 30 September 2026 |
| Price to earnings, FY2028 forecast | about 16.5 times | UOB Kay Hian’s FY2028 EPS forecast of 25.3 cents (21 August 2026) |
| Historical mean P/E used by UOB Kay Hian | 19.7 times | Implies about S$3.86 on trailing earnings |
| Dividend yield | about 1.7% | FY2025/26 dividends of 7.0 cents (2.0-cent interim plus 5.0-cent final) |
| Market value | about S$6.2 billion | About 1,486.5 million shares |
The half-year net profit of S$156.2 million is about half of UOB Kay Hian’s full-year forecast of S$315 million, so the year is on track rather than ahead (UOB Kay Hian, 21 August 2026).
The valuation tells the story. On trailing numbers, SATS trades about 1.6 turns above the historical mean multiple UOB Kay Hian uses for its own target. It only looks good value if FY2028 earnings grow by about 20%, as UOB Kay Hian expects. Buyers at S$4.17 are paying today for next year’s recovery.
What the brokers say
Each rating carries the date of the broker’s report. Of the five, only DBS has published since the results; the others predate the results and the recent rally.
| Broker | Rating | Target price | Report date | Change from S$4.17 |
|---|---|---|---|---|
| DBS Group Research | Buy | S$5.00 (unchanged) | 12 November 2026 | about +20% |
| Phillip Securities Research | Buy | S$5.01, from S$4.52 | 24 August 2026 | about +20% |
| UOB Kay Hian | Buy | S$5.00 | 21 August 2026 | about +20% |
| OCBC Group Research | Buy | S$4.70, from S$4.20 | 20 August 2026 | about +13% |
| CGS International | Add | S$4.40, from S$5.20 | 30 October 2026 | about +6% |
The OCBC and CGS International figures are taken from published summaries of their reports. UOB Kay Hian’s S$5.00 is 19.7 times FY2028 earnings. Phillip’s target is based on discounted cash flow (Phillip Securities Research, 24 August 2026), and CGS International’s discounted cash flow value implies about 16.9 times FY2028 earnings. Across nine analysts tracked by S&P Global, the average target was S$5.00 as at 26 October 2026. We found no hold or sell rating.
DBS said there would be “more updates to follow after the analyst briefing”, so expect revised notes in the coming days. CGS International, which cut its FY2027 earnings forecast by 10.6% before the results, is the one to watch for an upgrade.
Risks
The Middle East conflict is the main one. It has pushed up energy and input costs and forced flights and cargo onto new routes. CGS International notes that Riyadh cargo operations were suspended on 13 October after missile attacks. DBS points out that Asia-Pacific flights handled fell 8.9% in the quarter “as higher fuel costs prompted airlines to reduce flights”.
E-commerce is another. CGS International flags the EU’s removal of its €150 duty-free threshold and a flat €3 customs duty per item from 1 July 2026 as a drag on China to Europe parcel volumes. Add the negative free cash flow, higher leverage and the costs of expanding into new markets.
What to watch
Books close for the 2.0-cent interim dividend on 20 November, with payment on 10 December 2026. Beyond that, CGS International expects the Bangkok central kitchen to open in January 2027, and the Food Solutions repricing should show up in the coming quarters. SATS has not announced a date for its third-quarter results.
The verdict
SATS gave the market what it wanted: a beat, a margin turning up and cargo volumes running ahead of the industry. The long-term case for a global cargo network gaining share is intact, and every broker we found rates it a buy or add.
The price has already moved, though. At about 21 times trailing earnings and a 1.7% yield, the shares sit above the historical mean multiple, and most targets imply about 20% upside, but nearly all of them were set before the results. CGS International’s sits only about 6% above the price. Underneath the beat, half-year operating profit fell, quarterly profit growth came from a lapsed tax charge, free cash flow was negative and the dividend did not grow. That is a fair risk-reward, not a compelling one.
We would move to buy on a pullback towards the historical mean multiple, around S$3.86 on trailing earnings, or if the second half shows positive free cash flow with the EBIT margin holding at 8.5% or better, or if brokers lift their targets meaningfully after the briefing. We would move to sell if margins slip back to 8% or below in the third quarter, or if the Middle East disruption leads to lasting cargo losses.
Research by Warren.
This is general information, not financial advice, and does not take into account your objectives or financial situation.
