I have now had a chance to go back to basics, looking at the "known knowns" rather than speculation and inference. I have excluded earnings from Artemis as they are difficult to forecast and I would rather have them as potential additions than in the base figures.
The starting point is capacity of 18GHz provided by Hylas 1-3 and 28GHz from Hylas 4. The recent statement says that sales are currently being made at or above the target price of US$2K per month so the maximum revenue from H1-3 is $432M and with H4 is $1,104M. The statement says that the fleet (including H4) is capable of generating sales $700M per annum i.e. unutilised capacity is assumed as being 36.6% and that EBITDA is $500M. So the cost of sales excluding depreciation and interest is about 28.5% (currently 60% but clearly there are economies of scale to be generated). Depreciation will increase with H3 coming in but H4 should be revenue earning before its depreciation charge weighs in so say an annual charge of $55M (currently $47.3M). Interest will be charged on the loans etc of say $50M (currently $39M). I would therefore expect pre-tax earnings of around $175M. There may well be a tax holiday created by the Capex but let's assume worst case 20% giving a net profit after tax of $140M which converts into $1.25 ish per share (assuming no further shares are issued). On a multiple of 15 - low but could be significantly higher if the prospect of more satellites is tenable) - this would give a share price of around £11.80. The ability to sell the unutilised capacity of $404M obviously gives a substantial upside to the bottom line as everything except tax has already been written off.
Why was I so upset before my time away? Well, the answer is in the fleet. As I instinctively sensed the business with only H1-3 appears to be very marginal... profitable just... more so if they can achieve higher utilisation rates. H4 is the elephant in the room and that's why it had to be included.
It really would help if the BoD could say what they think the percentage utilisation could be. There's obviously some loss but is it really as high as they appear to assume or are they keeping it under their hat to produce better figures later in the game? I've looked at the sales forecasts that are published e.g. 4 Traders and there seems to be a disconnect between what the company is saying and what the analyst think. For example 2016 Sales £84.1M at recent exchange rates equate to $133M but by then H1-3 will all be live and have potential income of $273M. But if the analysts are to be believed they will still have unsold planned capacity of $140M when H4 comes into service. So there's a real disconnect between what the company is saying in its published statements and what the analysts are assuming. 2015 will be a critical year because it should begin to show who's got it wrong.
I completely agree about shorting , it is such a cynical thing to do .The problem with AIM is that people want and expect instant riches and that just isn't the way the world works. Having said that if the herd move and you don't you get caught with your pants down,it's very frustrating. My recent experience is that no "news" is a cue for shorting and day trading and good " news" is a signal to sell . It is crazy but you start thinking that if that is what you have to do then you maybe should join them. Certainly buying and sitting on a share ,however good, is not the thing to do it would appear. Having said all that AVN ,as you say, for all those with the balls to sit and let all the madness go on around them will come good in the end. Where that end is is the big question . Good luck to all in here.
The point to bear in mind escargot is that this WILL be a 100% money spinner. The only question which seems to upset traders is WHEN? I'm really not fussed as long as it's inside 10 years as my pensions in it, and I really don't care about the mascinations introduced by trader types. But Shorters do p1$$ me off I have to say, as I believe the practice should be illegal.
to see this doing better although not in here at the moment. I have taken a real good hiding on my oil stocks if it's any consolation . Looked at getting back here last week but was so pi$$ed off with AIM decided to keep my powder dry. Good luck guys ! Keep me a window seat on the loony toons bus !
I believe the Annual Report should be published by the end of this month, as it has to be out within 120 days from End of June. We will then know for sure the AGM date. I hope in can attend. Anyone else interested in going please let me know.
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