The De Minimis exemption, which previously allowed shipments valued under US$800 ($1,033.38) to enter the US duty-free and with expedited clearance, was removed earlier this year. As such, retailers such as Amazon moved from direct-to-consumer international shipping to increased US-based warehousing. Sats is serving the increased demand for domestic freight routes within the US as retailers bring their inventory closer to their end markets and restructure their supply chains towards domestic distribution, Osman points out.
PhillipCapital analyst Hashim Osman has downgraded his call on Sats to “neutral” but with a higher target price of $3.84 from $3.66. Shares in Sats have traded past Osman’s previous target price, closing at $3.75 on Dec 18.
“Our higher target price reflects our expectation that the removal of the De Minimis exemption will be less disruptive to Sats’ cargo operations in the Americas, supported by rising demand from US domestic freight routes," says Osman in his Dec 19 report.
