As Sami Kassab of investment bank Exane/BNPP reported in a note to investors, the news that AsiaSat is to move to private ownership is not the best of decisions for the other listed satellite majors.
“Carlyle and CITIC currently own 74 per cent of Asiasat and have jointly made an offer to take the company private citing poor share price liquidity and public listing costs,” said Kassab. “Asiasat is a leading satellite operator in Asia with HK$1.4 billion (c€163 million) of annual revenues and an 82 per cent EBITDA margin. Sixty-five per cent of its revenues are derived from Video and 35 per cent from telecoms and broadband services. Twenty-five percent of its revenues are derived from China, 16 per cent from Hong Kong and 59 per cent from other Asian regions. It has seen headline revenue and EBITDA growth for the last three years including +6 per cent headline revenue growth in 2018.”
All that is good news. But Kassab then crunched the numbers and the amount being paid to purchase minority shareholders. Then the news isn’t so good…
“We estimate that Carlyle valuation of HK$10.22 per share (a 31 percent premium to the undisturbed share price) implies a trailing EV/EBITDA multiple of 5.1x,” said Kassab. “SES and Eutelsat currently trade on 9.6x and 7.0x trailing EV/EBITDA. Assuming our C-band valuation is fully captured in the current share price, we estimate that SES currently trades on 5.6x ex C-band with Eutelsat on 6.6x ex C-Band.”
“The low liquidity of Asiasat shares may partly explain the valuation gap. However this second take private (after Inmarsat’s) does not provide a positive valuation read-across for SES and Eutelsat’s [valuations]”