Bank revises expectations for SES

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Satellite operator SES has been re-examined by investment bank Jefferies based on its most recent financials and guidance for the rest of this year.

The result can best be described as “mixed”. SES has guided that overall revenues will slip back for this next couple of years and these forecasts are reflected in the bank’s new numbers. The overall reductions are expected to fall 4.8 per cent for 2021 with EBITDA down by 5.3 per cent.

Jefferies takes three benchmark views, a Base Case, with an Upside Scenario and a Downside Scenario.

The Base Case assumes:
· Satellite has a long-term role in developed market TV transmission
· Emerging market data / TV markets drive growth on back of expansion capacity
· Aviation connectivity demand for HTS capacity drives growth
· C-band cash proceeds inflow as per guidance timeline
· Revenue growth in-line with guidance
· A Share Price target of €11.5

The Upside Scenario assumes:
· Strong take-up and price inflation for capacity, especially in emerging markets
· Earlier-than-expected normalisation of US government demand
· Enterprise declines moderate quicker than expected
· Price target of €14.0

The Downside Scenario assumes:
· Video goes into structural decline
· Major USD depreciation against Euro
· Further launch delays
· Failure to monetise expansion video capacity
· C-band spectrum windfall is delayed
· Enterprise declines worsen
· Government revenue declines worsen
· Price target of €5

SES share price closed on March 26th at €6.88.


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