SES (AO) | Buy | Q2 results preview: A soft quarter before an expected H2 recovery

Research evidence excerpt

SES (AO) | Buy | Q2 results preview: A soft quarter before an expected H2 recovery

SES Buy | Target Price: EUR10.50

Company description Management

Founded in 1986, SES is the world’s largest fixed satellite service (FSS) operator, Adel Al-Saleh, CEO

managing a fleet of around 50 satellites that deliver coverage across North Sandeep Jalan, CFO

America, Western Europe, and several emerging regions. The company transmits Frank Esser, CoB

more than 7,000 TV and radio channels for direct-to-home reception, cable Key shareholders

distribution, and content contribution services. Free float 83.33%

Luxembourg State 5.79%

SNCI 5.44%

BCEE 5.44%

Investment case Valuation methodology

With Europe’s wake-up call on Defence autonomy and desire to Our 12M forward TP is obtained from our DCF model, in which

build a sovereign satellite communication infrastructure, we we use an 10.3% WACC and 0.0% terminal growth.

expect SES to benefit from rising demand from governments Our DCF yields a fair value of EUR6.30 per share for the core

and companies for its MEO capacity. business, to which we add EUR4.20 per share for C-band

We expect its strong FCF generation and synergies from Intelsat monetisation.

to drive rapid deleveraging, offering sufficient flexibility to We value C-band monetisation based on the risk-adjusted

navigate potential challenges, fund its substantial capex present value of the estimated cash proceeds.

programme, and sustain shareholder distributions. Risks to our rating

Thus, we believe SES has become an attractive play on EU Risk of further overcapacity in some segments, such as

Defence autonomy with potential upside from the upcoming C- connectivity solutions.

band auction. Commercial/technical issues on O3b mPOWER.