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Bank: “SES accelerating in 2023”

July 1, 2021

A report from analysts at investment bank Exane/BNPP suggests that the recent pair of refinancing Bonds and Notes issued by SES will themselves boost earnings/share by about 6 per cent in 203. There could also be more benefits on the horizon.

SES’s share price is firmly stuck in the near-static doldrums at around €6.40-€7.00. Sami Kassab, media analyst at the bank has reiterated its Target Price for SES at €10 (with an “outperform” rating and saying that “We also see the possibility for additional C-band payments to be announced in coming weeks.”

Those extra C-band payments will come not from the FCC’s already announced incentive and as part of the early clearing of C-band frequencies, but potentially from telcos in the US.

The market will probably get an update on August 4th when SES delivers its Q2 results numbers. Kassab adds that he expects €433 million of revenues and €265 million of adjusted EBITDA for Q2/21. Consensus is still emerging, but we expect it will be around those levels.”

“Q2/21 is likely to be marked by weakness in Mobility driven by Covid-19 as well as a c€4 million quarterly negative revenue impact from the contract restructuring with Global Eagle Entertainment. On the other hand, we see Government revenue growth accelerating and believe that Video should continue to improve vs last year (Euro 2020 football and price increases at HD+ helping). We expect management to reaffirm its full-year and 2023 guidance. We also expect the mPower order backlog to be marginally higher and note that the US Government generally does not commit to satellite capacity before launches,” he adds.

Then the inevitable ‘jam tomorrow’ hint is explained in detail, and in particular from the launch and entry into service of the SES ‘next generation’ Mid-Earth orbiting mPower fleet.

The bank says: “We continue to believe that mPower will drive an acceleration in SES Networks revenue growth enabling the group to return to sustainable positive growth from FY23 onwards. The 6.3 per cent prospective dividend yield the stock trades on suggests this scenario is not yet discounted in the share price. We also see the possibility for additional C-band payments to be announced in coming weeks. We reaffirm our positive view ahead of Q2 results. We see the launch of mPower’s first satellites in H2/21 and a gradual acceleration in SES Networks organic revenue growth (1 percent in Q2 vs 0 percent in Q1/21) as the main catalysts.”

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