Inmarsat wild fluctuations

[spiderbill]

Bizarre share price fluctuations today on Inmarsat following the 3rd Q results
http://www.digitallook.com/cgi-bin/dlmedia/rns.cgi?action=news&rns=1&view=full&story_id=26677463
Earlier this morning it was around 8% up, just looked again and it's 7½% down!

Bought it for the dividend and as a bit of diversity from Vodafone but not looking a good choice capital-wise now - 25% down - and the cover has dropped to near-VOD levels too.

[CommissarJones]

Regrettably for holders, ISAT has reverted to its bad old ways in terms of failing to cover the dividend with free cash flow, after managing the trick for the first time in five years in 2016. The company paid out $118 million in divis in the first nine months of 2017 while generating FCF of $83.9 million, according to today's statement. (That's about 71 cents of FCF for every dollar paid out, to put it another way.)

[dspp]

El Reg has a comment :
Brit satellite biz Inmarsat has doubled its statutory profits and grown its revenues, thanks mainly to its in-flight Wi-Fi offerings.
http://www.theregister.co.uk/2017/11/10 ... q3_fy2017/

[UncleEbenezer]

El Reg has a comment :
Brit satellite biz Inmarsat has doubled its statutory profits and grown its revenues, thanks mainly to its in-flight Wi-Fi offerings.
http://www.theregister.co.uk/2017/11/10 ... q3_fy2017/

Hence no doubt the share price looking like a cousin to Carillion (lowest in more than five years).

A juicy yield indeed for HYPing. Or did something bad happen to the divi?

[UncleEbenezer]

Chairman and CEO take advantage of low price to fill their boots. £100k each looks like a vote of confidence.
https://www.investegate.co.uk/article.a ... 633052291W

[spiderbill]

Well at least they're putting the money where their mouth is. That's a hopeful sign - assuming they're good judges of prospects.

[ReformedCharacter]

£10 a share according to the FT

https://www.ft.com/content/35b3ac72-d6b ... 60cb1e5f44

I have some ISAT and would take £10 very happily. A takeover at some point seems likely - the satellite communication business is rapidly evolving and there are almost certainly too many large companies in competition IMO.

RC

[UncleEbenezer]

Falling knife!

What does the market know that we don't?

[moorfield]

Falling knife!

What does the market know that we don't?

A Goldman Sachs downgrade today.

http://www.proactiveinvestors.co.uk/com ... 88579.html

ISAT is a pass for me. I've had one higher yielder (CLLN) go pop this year, another one (CNA) that might. I can do without another and if I want more ~8% yield would rather take that from my prefs.

[onthemove]

Falling knife!
What does the market know that we don't?

A Goldman Sachs downgrade today.
http://www.proactiveinvestors.co.uk/com ... 88579.html
....

From the article ...

"The analysts also noted that, since being added to their buy list in August 2016, Inmarsat shares are down around 43% versus the FTSE World Europe index.. "

Added to their 'buy' list?

In 2016...?

"They added: “ We expect near-term momentum to be impacted by the ongoing debate around the dividend (which has broadly been uncovered by FCF since 2011)"

I already hold and am down quite a way, but on a PE of around 13 (according to yahoo), I might consider topping up when the current dust starts to settle (a drop of this magnitude on apparently a single broker report suggests to me there may still be more nervousness while investors re-adjust, and start fearing that there is something worse to come.

My original investment was 2/3rds my single share limit, so a top up now, could double my holding. I'm definitely keeping an eye on it.

Inmarsat is one of the few companies that I see as lower risk against brexit and a labour government. It's a hi-tech company, providing global services.

The hi-tech, imv, avoids labour interference. Unlike regular utilities, this is about as far away from individual consumer utility provision as possible. Inmarsat products are never likely to be used, at least not directly, by the typical individual. So there should be low risk of price controls from labour, or threats of nationalisation or claiming it's forcing people to use food banks, or whatever.

Being both hi-tech and global, it's also the sort of company that brexiteers know they need to support. Also since it generally operates globally in USD, it should be insulated a little from fluctuations in the pound, and / or brexit induced economic slowdown within the UK. Being hi-tech, etc, it is also in a sector which the brexiteers know they need to prioritise in any future global trade deals.

On the flip side, they may be subject to less contracts from Europe, when the EU insist that their space program, etc, be implemented within the EU. Though they may be able to get around that by relocating subsidiaries, offices and operations, etc from the UK into the EU. Though obviously some disruption will be had, and there's still the risk that the EU would prefer contracts with wholly-in-the-EU companies.

The unknown from my point of view, is how much Inmarsat are dependent upon current EU trade deals with the rest of the world. When Britain leaves the EU, we could reasonably find that other countries won't accept us continuing under the same deal we had as part of the EU. There are already signs that other countries see brexit as an opportunity to leverage their bargaining position, knowing the UK will otherwise be out in the cold if new deals aren't agreed at the point we leave. To what extent Inmarsat leverages these existing deals for their global operations, I don't know.

[UncleEbenezer]

On the flip side, they may be subject to less contracts from Europe, when the EU insist that their space program, etc, be implemented within the EU.

There is no EU space program. There is the European Space Agency (ESA), which has much wider membership than the EU. And Inmarsat is no part of that: it's purely commercial.

This is communications satellites. Not the same as scientific programmes (ESA's largely-government-funded work) or military stuff (which Europe doesn't really do unless as little bits of me-too, and ESA's charter explicitly forbids).

The risk to Inmarsat (that I'm aware of) is overcapacity in the sector. But that's certainly not new: it was equally true when ISAT shares were briefly north of a tenner!

[onthemove]

There is no EU space program. There is the European Space Agency (ESA), which has much wider membership than the EU. And Inmarsat is no part of that: it's purely commercial.

http://www.esa.int/About_Us/Welcome_to_ ... and_the_EU

"Some 20 per cent of the funds managed by ESA now originate from the EU budget."

http://www.eurocontrol.int/dossiers/single-european-sky

"For a performant air traffic system in Europe
As a response to the dramatic growth in air travel witnessed in the last two decades, the European Commission passed two Single European Sky packages to create a legislative framework for European aviation. ... The Single European Sky (SES) was born to meet this need. Launched by the European Commission in 1999, its primary aim is to meet future capacity and safety needs through legislation. "

https://www.inmarsat.com/press-release/ ... evolution/

"08 March 2016: Inmarsat, the world’s leading provider of global mobile satellite communications, has been awarded a contract by the European Space Agency (ESA) to enhance Air Traffic Management (ATM) in Europe with a new generation of satellite-based data link communications.
....
Iris Service Evolution supports the Single European Skies ATM Research (SESAR) masterplan for the next-generation of air traffic management, which offers a high-level view of the critical developments that are required to deliver a high-performing aviation system for Europe."

[onthemove]

On the flip side, they may be subject to less contracts from Europe, when the EU insist that their space program, etc, be implemented within the EU.

There is no EU space program. There is the European Space Agency (ESA), which has much wider membership than the EU. And Inmarsat is no part of that: it's purely commercial.

This is communications satellites. Not the same as scientific programmes (ESA's largely-government-funded work) or military stuff (which Europe doesn't really do unless as little bits of me-too, and ESA's charter explicitly forbids).

https://www.timeshighereducation.com/ne ... 33.article

"Inmarsat to run Galileo's network operations arm
Inmarsat will play a key role in one of Europe's largest industrial projects, the construction of a global satellite navigation system for the 21st century.
A consortium of eight leading aerospace companies and satellite operators, including Inmarsat, Aena, Alcatel, EADS Space Services, Finmeccanica, Hispasat, Thales and TeleOp, have signed up to help develop Galileo, the European equivalent to the US's Global Positioning System (GPS).
Network operations
The European Union project will be a joint venture between the public and private sectors."

[Wizard]

As of the closing price the yield is going to be north of 9%. Either a superb opportunity or disaster waiting to happen. I am very much 'risk off' at the moment so despite having run the rule over Inmarsat in the passed this is not one I will be picking up any time soon.

Terry.

[UncleEbenezer]

I'd be fine with a lesser yield.

Sadly I'll be needing to cash a fair few investments in time for my house purchase to complete. At current prices, ISAT is one I won't be selling.

[kempiejon]

I hold, they were my choice for the returned cash when Vodafone sold Verizon in 2014.
Wizard, last time I was brave enough to be buying around 8/9% yields was shell/BP spring last year andHSBC so far so good and I'd say the major oilies and international bank have a slightly better chance of looking after my income than ISAT.
ap8889 - I don't have any funds either until the new year, I wouldn't sell any of my CTYs to buy ISAT though even if I could more than double my potential yield in the process.

[moorfield]

As of the closing price the yield is going to be north of 9%. Either a superb opportunity or disaster waiting to happen.

I'm comparing apples with oranges perhaps, but Carillion's yield immediately before it's dividend cut was 9.6% .....

(Dividend 18.45p / Close 192.3p).