Inmarsat Share Discussion Threads

[rogerrail] 10/11/2017 10:22

Seems to me the market is acting in a hysterical fashion over what should be defensive income stocks . The share slide seems to be self fulfilling as the increasing attractive dividend yield becomes to be good to be true leading to fears it cannot be sustained exacerbated by the fear that the company has a good excuse to cut it and still maintain a decent dividend based on the new share price level.

[steeplejack] 10/11/2017 10:12

Of course the share price has no influence on the dividend.Yet the share price and the inferred rating is a function of the outlook for the company,cash flow projections etc.The market is suggesting (as reflected by the share price) that the dividend could be cut,it's NOT saying it should be cut,it's suggesting that circumstances might will determine that it could happen.Anyway,I'm off to look at other stocks in my portfolio.Its not that I hold many of these anyway,it just fascinates when a stock falls off a cliff .Failure is often a more salutary lesson than success in the field of investment.

[w1ndjammer] 10/11/2017 09:56

the share price should have no bearing on the dividend. any decent company looks ahead
and these are forecasting growth, just like Shell were when their share price was on the floor
and every man and his dog was calling for a divi cut.Ben Van Beurden said we are
looking 5 years ahead not the next 6 months.

WJ.

[steeplejack] 10/11/2017 09:42

Come the final dividend,it might be the company decides to cut.The most appropriate option might be to equalise the final with the interim payment,cutting the final by a third to 21.6us.This would give a total years payment of around 33p at current xrates.Thus,at around 5 quid the shares would be on a prospective yield of around 6.6%Whether the company cuts or not remains speculative but the share price is certainly discounting such an eventuality.5 quid is probably the bottom given the yield support offered even on the assumption of a slashed final distribution.

[steeplejack] 10/11/2017 08:07

FT reports that Numis is questioning whether the dividend can be maintained and retains 480p target.

[w1ndjammer] 10/11/2017 07:51

new broker note out today Jefferies international 1100p
get in there

WJ.

[steeplejack] 10/11/2017 05:17

The build up to a total 6.4% short (primarily consisting of six funds)has occurred since July and has clearly contributed to a near 40% slide in the share price.I don't see that there's any great rush for these funds to buy back.As far as the dividend is concerned,a cut might be beneficial to the price.(A heavyweight management appointment would help too).Cuts have often proved therapeutic in the past for the likes of Aviva,Royal and many others.The company needs to get its investor relations together and clearly define its strategy.The results presentations appear cluttered and lack clarity.It's too late to sell but I have no inclination to buy back the bulk of the stock I was so fortunate to sell coincidentally before the Numis downgrade.

[frazboy] 09/11/2017 19:10

I think that has to be balanced against a pretty remarkable slide in the share price over the last few weeks Pug - having said that I wouldn't rush to buy unless there's a material slide tomorrow - it'll be e interesting to see if the short positions change much in response to the update

[pugugly] 09/11/2017 18:37

IC_Sometimes known as KoDeath - They are imo fighting against the market - Heavily down on high volume - Any PI buying on the tip tomorrow could/maybe would be swamped by a rush of II's to continue unloading - but I am often wrong !! ~The cynic !!

[18bt] 09/11/2017 18:11

FWIW, here's the summary from the Tip Update in the IC tomorrow:
Amid the competitive pressures of the industry, Inmarsat’s heavy investment has allowed it to keep attracting new business. We think investors have been too hard on the shares, particularly now that the company is priced for a potential takeover. Buy at 517p.

[undervaluedassets] 09/11/2017 17:09

They have outlined a cogent strategy for growth.

Yes customer acquisition costs will mean slimmer margins on aviation initially but that is just normal for any hi-capex hi-growth company (which is what this is).

All very head-scratching especially as the numbers were fine.

[steeplejack] 09/11/2017 15:57

You can't copy and paste FT but here goes,all from Alphaville.

Alphaville concludes "Inmarsat does seem to have problems communicating its guidance to the market".

Cazenove observes,"We estimate that 40% the revenue beat and 65% of the EBITDA beat are attributable to one-off hurricane related spending (Government and Enterprise.)

Morgan Stanley,"Despite the strong headline Q3 results,management is sounding somewhat cautious over the 2018 EBITDA trajectory because 1)government pace of growth will not be sustained in H2 due to one off revenue item in Q4 2016 from Boeing take or pay and reduction in exceptional operational revenues outside of the US and 2)Aviation EBITDA margins will continue to build market share in inflight connectivity.Initial revenues are expected to be low margin installation rather than higher margin airtime revenues."

Alphaville observes that ISAT muddled the market a year ago by ringing round analysts to reduce guidance and thus has previous.

So there we are.A myriad of ifs and buts,the complexity of one offs and a pretty incompetent management communicating all the vagaries to the City.

[frazboy] 09/11/2017 13:55

by the way, there were some broker updates on this on the FT alphaville (markets live) this morning, worth a glance if you've not already seen them

[frazboy] 09/11/2017 13:52

aye, andy, i bought this on the back of his recommendation and opted out at the time of the Numis note (not that I have read it, only excerpts).

it does still look like the fall is overdone, particularly when you look at the fall since the Q2/H1 update. i guess my comment above reflects that I think they'll cut the dividend, and what we're perhaps seeing, is a reaction to the fact that has become more likely - that's my take on it at moment.

[andyj] 09/11/2017 13:48

Bearbull added this to the IC Income Fund in the summer, recently he said he would review the valuation in December. There miight be nothing left by then.

[frazboy] 09/11/2017 13:36

i wonder if the management team now think it was a good idea to incrase the dividend at the H1 results? If the current dividend is maintained, then it's over 10%. i just don't see that happening.

[zcaprd7] 09/11/2017 12:32

Well, half of it is, perhaps they should spin of the aviation bit, and keep the boring maritime bit?

[undervaluedassets] 09/11/2017 12:00

This is just the typical profile of a growth company entering new markets. In flight connectivity (IFC) is the huge new addressable market. ( in the future everyone will be tapping manically on their phones on planes - it is inevitable ).

There are upfront capital costs capturing customers sure... but this is just a typical growth story isn't it...

I was on the call and results and Aviation strategy looked sound.

[zcaprd7] 09/11/2017 11:45

Topped up (again)...

[frazboy] 09/11/2017 11:26

I think the rally this morning was a relief rally as there nothing untoward in the headline numbers (basically, just revenue numbers). I'm really guessing here, but I think the market may have then focussed elsewhere, probably on margins - for example the aviation margin got reduced, in comparison with previous guidance for 2018 (from 40 to 50 to about 40) due to increased costs.

Watching with interest...

[w1ndjammer] 09/11/2017 11:18

Bought more at 506 was interesting the initial market reaction first thing
this morning, which i thought was correct one, after listening to the Q&A this drop
seems crazy.

WJ.

[zcaprd7] 09/11/2017 10:47

Results look alright to me?

[cliffo2] 09/11/2017 10:43

At the level where it gets ugly for the shorts to pay the dividend if it stays as is.

[rounder2] 09/11/2017 10:30

Dividend - Uncovered , got to go
Borrowings too high with additional Cap-ex required going forward
NAV only going lower

This is a difficult one to call , aspects of potential upside

Short term price will go lower , much , and quickly

Ugly for longs I'm afraid but perhaps a buying opportunity in the future but who knows at what level ???

[undervaluedassets] 09/11/2017 10:24

Looks rediculously technical now.

I was on the call .. it was fine.

Feel as if I am looking at the wrong stock