Inmarsat Share Discussion Threads

[steeplejack] 03/1/2018 17:15

The most recent Investors Chronicle mulls over the ISAT conundrum .Mentions how both management and fund managers skirted round the issue of the dividend at the last update meeting.Quite how is difficult to understand.The IC concludes that it'll stick with a holding for now but with clear reservations.Afterall,it's difficult to recommend dumping a stock that's 60% off its 2017 high,a stock which the magazine had previously made a "buy".In my experience,when a stock falls like this,the market is invariably right.The company isn't thought likely to get the sort of returns on capital previously envisaged.A cut in the dividend would confirm that to be the case.Roll on March.I'll be hanging in for now.You can't get them all right.Sometimes these perceived steady eddies can fail so badly.Tesco would be another case in point.

[zcaprd7] 03/1/2018 16:43

It's not a new low yet, so we wait and see, has come up a bit off the lows recently and not much volume either...

[the original goldbug] 03/1/2018 16:43

Well to reiterate the issues are the balance sheet, dividend policy, capex numbers going forward, competition and size of addressable market.

The stock is still technically week so maybe needs to test the bottom. Or maybe the ‘issues’ are a bit more concerning than some of our posters think they are.

To conclude: the stock is still in the hands of the bears, but arguably the risk reward outlook is beginning to favour the bulls in the medium to longer term.

[frazboy] 03/1/2018 16:32

I suppose the question was more, what does the market know today that it didn't know yesterday? A 5% decline is not to be laughed at.

I do have a holding but I'm reluctant to add given the price action, and if I have to be honest, I don't have enough expertise in this domain to have the confidence to be overweight - so i do appreciate those thoughts goldbug.

[the original goldbug] 03/1/2018 16:18

Most ‘thoughts̵7; on this thread are nonchalantly swatted away.

Why get concerned buy the price falls when it’s another wonderful opportunity to add to your SIPP?

[frazboy] 03/1/2018 15:55

So... 5% decline thus far today. Any thoughts as to why, continuation of the downtrend established post the Numis report? Any corporate news out there from any of the competition?

[zcaprd7] 03/1/2018 11:40

Well, musk keeps arianespace honest I suppose...

[wskill] 03/1/2018 09:40

Yes poorly thought out article from FT look at tesla new models customers are waiting many year's for delivery yes a good concept .When the plane has equipment installed unlikely that they will switch supplier musk would have to give away the launch slots to make it viable.Also launch costs have already fallen a great deal.

[zcaprd7] 03/1/2018 01:34

Quite a good powder puff article in the telegraph on the 2nd of January, the CEO has a dig at Theresa May...

[zcaprd7] 02/1/2018 12:48

Musk has been saying that for years, much more important to get the birds up there and ground equipment fitted, to build a moat, than wait around for prices to drop.They will benefit on the replacement costs in any case...

[the original goldbug] 02/1/2018 10:02

Interesting article from LEX in the FT. If Musk’s Space X initiative to lower satellite launch costs plays out, Inmarsat will have overpaid considerably to build its network compared to the emerging next generation of players.

It’s a risk worth thinking about. After all there has to be some explanation why the stock has been so heavily sold off.

On the plus side self driving cars could open up an even bigger market than aviation going forward. Hopefully there is enough business to keep everyone fat and happy.

[wskill] 01/1/2018 00:40

Equipment is best in class no other providers are half as good. In the maritime market this will be replicated in avation but takes investment. which is why debt has increased

[the original goldbug] 31/12/2017 20:18

Maybe there was a more benign competitive backdrop in 2014?

[aleman] 31/12/2017 18:54

But in the last THREE years, net debt has barely budged while EBITDA has risen nearly 30%. A $230m rise in debt would only be about 10% so debt/EBITDA will still be rather better than 3 years ago. Were people calling for the dividend to be cut in H2/2014? With higher debt/EBITDA back then, the shares were 50% higher and subsequently rose to more than double the current price by end H2/2015.

[the original goldbug] 31/12/2017 17:01

There are two sides to every story and it is very reasonable to criticise a company which had to borrow to fund dividends.

Book value has not actually grown in 4 years, but the balance sheet has seen debt grow by a billion plus. This is not sustainable over the long term, but granted it can continue in the medium term but will increase the risk of holding the residual equity.

Yes, Aleman may be right and they might get away with it and rising profits will save the day. However, it is not prudent and the dividend policy undermines the growth stock hype attached to this company.

One could rather uncharitably say that some longs are complacent and conceited and have adopted an ostrich in the sand strategy.

For the record I am long with a decent position (for me) and average just over £5.

[aleman] 30/12/2017 12:00

But, on current forecasts, they only need to borrow about $230m to cover the part of the 2018 and 2019 dividends that are not covered by cashflows, after which capex eases and the dividend is covered. Nobody has yet come onto this thread and explained why the dividend should be cut using projected cashflow numbers, which seem to be adequate.

[zcaprd7] 30/12/2017 02:21

I don't care what they do with the dividend really...

[steeplejack] 30/12/2017 01:00

Share buy backs have historically proved ineffectual at shoring up a weakening share price for any length of time.On paper,share buy backs are returning capital to shareholders but that's all rather theoretical,it can all get lost in a day's price movement.This company needs to decide whether it's overpaying on the dividend.It's clearly absurd that ISAT is yielding some double the RPI and the market is suggesting it won't last.It's suggesting that the company could slash the dividend and that such a possibility is well discounted.I would like ISAT to cut the final dividend by a third in March at the very least.It would show that you don't have to pander to income hungry investors.Grow the business with your cash flow..Check out Indivior over the last year (who did away with dividend payments sometime ago)or look at HCM who don't pay a dividend at all.Hasn't really hurt their cause has it.This bond proxy investment approach might be diminished by a continued rise in US interest rates.

[the original goldbug] 29/12/2017 16:07

Because they do not enough have enough free cash to pay the dividend let alone contemplate buying back their equity.

You could make the case that buybacks are a more effective use of capital than dividend payments however. In this case buying back the equity at sub £5 is probably a better use of capital. Above £6 I would prefer the dividend.

[zcaprd7] 29/12/2017 15:56

I think the management are a bit slow to respond to the share price, why not enact a share buy back programme?

[zcaprd7] 22/12/2017 13:30

Indeed, they seen to think in terms broadband providers and hundreds of megs of terrestrial, fixed bandwidth... And near universal coverage.

[jamie62] 22/12/2017 07:28

I am not sure if they are any talks, I just heard that long term commitments are pending approval as they make the company less attractive. I have taken a position

[wskill] 21/12/2017 20:01

Another string to the bow a billion extra revenue ,the teen age scribblers will eventually realise ships will not change supplier due to cost of replacement equipment and lease obligations .