Last week’s SES results and subsequent analysts call with the satellite operator have now been examined in some detail. One analyst from investment bank BNP Paribas has digested the slew of information and explains why the full-year numbers turned out to be ahead of consensus.

The end result from Sami Kassab is to reaffirm its “Outperform” guidance for clients, but the bank has trimmed the share target price from €10 to €8. In truth, shareholders would welcome either price being achieved having been in the doldrums for the past two years where the maximum price achieved never exceeded €7. SES share price has risen 35 percent this year.

Kassab adds that SES’s fleet of mPOWER mid-Earth orbiting satellites are “already fully sold out”. “This,” he added, “[has] forced management to take capacity away from lower-priced Fixed Data to service the demand for higher-priced Government segment. Despite talk of Starlink dominance, excess capacity, and pricing pressure, mPower is already sold out. SES Networks revenue growth has remained positive since SpaceX launched the Starlink satellite. This underpins our view that SES Networks is sufficiently differentiated from Starlink for both to prosper.”

The bank’s report says: “SES is a high-risk investment case and best approached through a pair trade with Eutelsat (-) in our view. But we continue to believe mPower will be a commercial success and will drive a return to sustainable revenue and EBITDA growth. Therefore, we see potential for the shares to double as investors reappraise the sustainability of the cash generation profile of the company with further commercial success of mPower (satellites 7 and 8 have been launched in December and will enter into service in H2) as well as progress on C-band and insurance claim proceeds.”

Kassab also talks about the cash return to shareholders, saying: “Management also announced that when leverage of the combined SES/Intelsat entity falls below 3x (expected by end of 2026/early 2027), it would prioritize shareholder returns when allocating any future exceptional cash flow. We believe this suggests that both the insurance claims of EUR472m and potential future C-band proceeds are likely to be returned to shareholders.”

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Categories: Blogs, Business, Inside Satellite

Tags: bank, Sami Kassab, SES