Advanced Television

SES a “key pick” by bank

March 21, 2014

Satellite operator SES has been given a very strong “key pick” endorsement by investment bank Berenberg. Senior analyst Sarah Simon says she is raising the bank’s share price target on SES from today’s €25 to €29.60.

SES has recently ordered a new satellite (SES-10) for the LatAm market, and while new data/broadband constellation O3b “might also be a drag on earnings at present…the moment at which a positive value (on O3b) is moving closer.”

“Even with the potential to acquire the rest of O3b, spend more on growth satellites, and invest in Asian assets, SES will have too much free cash flow over the next few years not to need to return the excess to shareholders. If the company does nothing, we estimate that it will need to return €3.8 billion by the end of 2018. If it does all of the above, it will still have €3.2 billion. This is after assuming that the dividend increases by 10 per cent per annum,” says the bank’s note to client.

We reiterate SES as a key pick within European media. It offers above-sector average organic growth, dividend and free cash flow yield, while at the same time having the ability to return up to 30 per cent of its market capitalisation through special dividends and/or buybacks. In our view there is nothing within the media sector, at the present time, that offers such high total shareholder returns.”

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