Analysts from UOB Kay Hian (UOBKH) and Maybank Research have maintained a "buy" rating on Sats, a leading ground handler and in-flight caterer, while raising their target prices. This optimism is driven by a robust global air cargo rebound and increased confidence in the company's long-term growth prospects.
In a sector update on July 2, 2026, UOBKH analyst Roy Chen raised his target price for Sats to S$5.00, up from S$4.75. Similarly, Maybank Research analysts Liu Miaomiao and Eric Ong on July 1, 2026, upgraded their target price to S$5.09, up from S$4.52.
The primary catalyst for this positive outlook is the faster-than-expected recovery in the global air freight market. UOBKH forecasts Sats to achieve a 12% year-on-year net profit growth, reaching S$80 million for the first quarter of the 2027 financial year. The brokerage also upgraded its earnings forecasts for FY2027 to FY2029 by 4% to 5%, citing the improved cargo outlook.
Sats continues to gain market share in air cargo handling, with its cargo volume projected to grow by nearly 10% year-on-year in Q1. The company's ground-handling volume is also expected to record high single-digit growth, supported by increased business in the Americas following new contracts with Allegiant Air and Azul Airlines.
However, Sats' food business faces temporary headwinds. Volume growth is anticipated to be slower, in the low-to-mid single digits, due to increased flight cancellations during the April to May period amid fuel supply concerns.
Despite short-term volatility, Chen noted that Sats has de-leveraged its balance sheet from a 90% net gearing immediately after the Worldwide Flight Services acquisition to a 55% level as of the end of FY2026. This provides Sats with more flexibility to enhance shareholder returns by potentially raising dividends or making bolt-on acquisitions.
Maybank's analysts echoed the positive sentiment, expressing greater confidence in management's ability to deliver on financial targets. The brokerage reduced its weighted average cost of capital (WACC) to 10% from 10.6% and increased its FY2026 and FY2027 earnings forecasts by 2.5% and 9.7%, respectively.
While Sats' cargo volumes have outperformed the International Air Transport Association for 10 consecutive quarters, Maybank predicts the next major earnings growth will shift from cargo to food solutions. Its Thailand central kitchen, scheduled to commence operations in October, is expected to centralize frozen meal production and improve utilization across the group's regional kitchen network.
Meaningful earnings contributions from food solutions are expected from FY2027, with margins expanding as production scales and operating leverage improves. Maybank added that Sats' management has reaffirmed its FY2029 targets. The group remains on track to achieve revenue exceeding S$8 billion, an earnings margin of at least 20%, and a return on equity of 15%, supported by sustained market share gains and selective inorganic expansion.