SES financials set to improve

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Satellite operator SES is due to release its Q3 financials on October 26th, but on September 20th briefed analysts on its latest guidance ahead of entering its obligatory ‘closed period’. It seems that after a couple of years in the doldrums things are slightly looking up at SES Video Networks division.
Sami Kassab, media analyst at investment bank Exane/BNPP said that while no new information emerged, SES reaffirmed that it is on track to deliver on its FY19 guidance.
“We believe that after two years of pressure, the performance in SES Video International markets is set to improve,” said the bank.  “SES recently won significant contracts with broadcasters in Brazil, Ethiopia, Ivory Coast. These will help Video trends improve further in Q4 19. We also point to the findings of our Exane Satellite Monitor Q3/19 edition, which suggests better satellite capacity video demand trends for SES.”

“We expect SES to report an improvement in organic revenue growth trends in Q3 and to guide for a return to organic revenue growth in Q4 19. For Q3 19, we expect group underlying revenue decline of -1 per cent (after -3 per cent in Q1 and -5 per cent in Q2). We see this driven by an acceleration in SES Networks top line growth profile (Exane at 8.6 per cent in Q3 19 after 5 per cent in H1 19) and a slow-down in the rate of SES Video revenue decline (from -10 per cent in Q2 to -6 per cent in Q3/19),” said Kassab.
“We expect the acceleration in SES Networks to be driven by the entry into service of SES 12 (and the Teleglobal 1.3Ghz capacity lease agreement – we estimate that is worth $10-12m annually), benefits from the Intelsat IS29e failure (we estimate worth c€10m annually) as well as further growth in the Maritime/Cruise (Carnival, Dreams) and Aero segment (LuxStream capacity deal),” he added.
The bank’s note said it expects SES to report €305 million of EBITDA with an EBITDA margin of 62 per cent in Q3/19, up from 60.4 per cent and 61.2 per cent in Q1/Q219.


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