2HFY21: Sequential Improvement In Earnings, But FY22 Would Be Highly
Challenging
SATS’ sequential improvement in earnings and strong cash generation are key
positives, but the latter was mainly due to government grants, excluding which full-year losses would have widened. Going into FY22, we estimate that grants could decline by 60% yoy. While investors are clearly looking beyond FY22, we are concerned about margins on inflight meals as well as inflationary cost pressures.
Maintain HOLD. Target price: S$4.09.