Inmarsat Share Discussion Threads

[zcaprd7] 27/10/2017 10:42

Had another nibble...

[targatarga] 27/10/2017 09:51

At least when they bounce they usually fly!

[zcaprd7] 27/10/2017 09:31

Not a great chart... Happy to to keep building my position

[steeplejack] 27/10/2017 09:19

52 week low.

[zcaprd7] 27/10/2017 08:57

Sigh. They've just relaunched a new fleet to combat the technology issue, each bird has a flight life of 15 years odd... That's why they are at the inflection point of capex.

[the original goldbug] 26/10/2017 14:54

I really wanted to believe in this story as I have too much cash and I thought buying the stock at 3 year lows and at a massive chart support (5 year chart) point was the right thing to do.

The fact of the matter however is that the equity is geared nearly 200% so the room to increase borrowings is reaching a practical ceiling. Therefore, unless capex falls or returns on invested capital start increasing, the dividend will inevitably be cut soon. The unpleasant truth is that debt has grown at a far quicker clip than EBITDA and that suggests that returns on capital are actually falling.

Beyond that it concerns me why management would make the decision to increase borrowings so aggressively to maintain a dividend.

More relevant to the underlying business opportunity is why they have such low market share in the growth aviation business. Many of the broker notes also make vague reference that their technology could become obsolete due to a generation of newer players with the latest kit beginning to move in on their markets.

Lastly, the valuation story is not that exciting even if we assume the status quo or a more rosey scenario of EBITDA growing to say $1b by day 2021. That would still put it on 6.5x EV/EBITDA in 2021. Thus I fail to see what the upside is, unless we are all missing something on aviation and they begin to clean up soon.

I’ve bailed but wish the rest of you well.

[gerdmuller] 26/10/2017 14:38

Okay not held these since 2006 so starting looking at consensus earnings which seem to suggest earnings growth of about 15 percent and forward PEs of 19 and 17 at the current price. Dividend is higher than earnigs for both years but I will look at the cash flow when I get a chance.

[aleman] 26/10/2017 14:36

Interest is $100m. Well covered at about 7.5 times. It will rise with the planned capex, though, and interest rates are likely to rise some but it should not be a problem with EBITDA of $750m that should rise again as capex returns feed through.

[rcturner2] 26/10/2017 14:31

Aleman, what is the value of I though, surely that is highly relevant to the cover?

[ddubzy] 26/10/2017 14:28

DB seem to like it.Risk/reward here pretty good isn't it?

[aleman] 26/10/2017 13:58

EBITDA is going to be about $750m and the dividend about $240m. Tell me how it is not covered, please.

[zcaprd7] 26/10/2017 13:51

Because said company knows it will be spending less on replacing satellites, and generating more cash...

[gerdmuller] 26/10/2017 12:00

Why does a company constantly want to maintain a 7 percent plus dividend with uncovered earnings?

I think as someone intimated earlier, because they are terrified to cut it as they know the consequences for the price.

I saw that Numis set a price target of 480p a few weeks ago and looking at the earnings projections that looks a better target than some of the others. Especially now there is also litigation uncertainty.

[zcaprd7] 26/10/2017 07:47

He doesn't have the money...

[wad collector] 24/10/2017 12:20

Kim Jong-un would snap it up.

[wad collector] 23/10/2017 16:15

Yes lets start a bid rumour....

[redips2] 23/10/2017 14:14

...... and not forgetting that old 'potential takeover target' chatter .

[mrthomas] 22/10/2017 07:26

Thanks for the above comments very good I just hope that not only can they sell the new products but that they don't have to cut prices. To me this is all about cash flow and can they fund the dig payout. As if they had to cut that the price would tank

I brought the share on 3 yrs lows and will see if I hold long term or till it gets to £7 again quickly

As worry that we due for a market correction soon but I like good comments on this thread

[zcaprd7] 20/10/2017 15:32

Good work aleman, demonstrates my written comments... Cash flow will increase substantially going forward.

[undervaluedassets] 20/10/2017 15:22

The aviation broadband pie is huge.

Of inevitability Inmarsat will cut themselves a slice.

[aleman] 20/10/2017 10:29

Operating cashflow before working capital movements

2013 $597.1m
2014 $644.8m +8.0%
2015 $705.5m +9.4%
2016 $770.9m +9.3%

(2017/H1 $387.4m)

It was higher pre-2013 and this year looks like it will be down slightly but I think we might see a return to recent growth thanks to the massive capex, which looks like it can be afforded with this level of cash generation - without threatening the dividend. As I said earlier, H1 net finance charge was $50.2m - so $100m for the full year. More looks manageable on current cashflow, even if rates go up a bit - but the massive capex should see cashflow increase in the next few years, should it not?

Some companies that make acquisitions or big capex have results that can be a little distorted by depreciation and amortisation estimates. I think it's better to look at cashflow and where it might be headed, which is what the banks do when considering more lending.

[essentialinvestor] 20/10/2017 09:50

Points well made. and similar comments have been made previously.

[the original goldbug] 20/10/2017 09:38

What I have found very revealing is that the Enterprise Value (net debt plus market cap) has remained constant over the last 4 years. In 2014 the market cap was bigger and the debt smaller, fast forward to today and the debt is bigger and the market cap smaller. All those glorious dividends, while helpful, have nevertheless been lost due to the decline of market cap in the period. In other words the dividends are a product of gearing the balance sheet.

Also EBITDA has not materially changed since 2014, so I under the market’s circumspection in regards to the ‘growth stock’ label.

[zcaprd7] 20/10/2017 09:00

They are not replacing satellites, like with like, they are increasing throughput, so are have more bandwidth to sell, and the satellite are getting cheaper.Obviously, the price they can charge is dropping as well, but those brokers imply a rather static model...