Satellite broadband and airtime reseller Satellite Solutions Worldwide (SAT:AIM) is closing on its first full year of profit, and what we believe will be a substantial share price re-rating.

The Bicester-based company’s financial year ends on 30 November and forecasts in the market call for £19.8m revenue and earnings before interest, tax, depreciation and amortisation (EBITDA) of £1.1m, signalling a transformational 12 months. Satellite Solutions Worldwide will report its first ever pre-tax profit, of around £0.5m, if earnings forecasts are met.

Michael Armitage, analyst at the company’s appointed broker Arden Partners, predicts that the shares will hit 12p during 2017, or nearly 75% upside from the current 6.88p level.

Satellite Solutions Worldwide is a satellite broadband and air me reseller with around 75,000 customers across 32 countries. It supplies homes, businesses, broadcasters, construction sites, even parts of the military, that are based in rural areas where fibbre optic or copper networks fail to reach. The £37m company buys capacity from commercial communications satellite owners with the right geographic footprint, currently French operator Eutelsat (ETL:PA), SES (SESFd:PA) of Luxembourg, and the UK’s Avan Communications (AVN:AIM). It then resells that capacity to end-users, plus a margin.

Estimates suggest an addressable market of close on 20 million potential customers across Europe.  Satellite Solutions is targeting 100,000 over the next 12 months.

Customers are acquired through direct channels, such as telesales and its website, as well as through resellers which share part of the profit. Another route is by acquiring distributors whose customers can be migrated onto Satellite Solutions' Europasat platform.

It is on the acquisitions front that the company has made massive progress through 2016. The company has more than doubled in size through three acquisitions – Avonline, Breiband and SkyMesh, supported by a £12m fund raise in July.

Investors tempted to buy shares in this emerging growth businesses will be in good company. Satellite Solutions Worldwide is backed by property tycoon Nick Candy, whose Candy Ventures vehicle owns a 10% stake in the business.

Company directors have also been raising their personal stakes, with four board members combining to purchase close on 1.1m shares on 16 September worth in excess of £85,000. The swoop was led by CEO Andrew Walwyn, the single biggest investor in the company with a 9.2% stake. (SF)

Having taken a cautious view of the shares when we first looked at the investment case after the May 2014 IPO, Satellite Solutions has executed its growth bang on plan. We see recent weakness in the stock as a buying opportunity.

‹ Previous2016-11-17Next ›