(AOF) – Trading in SES Imagotag shares has been suspended at the company’s request, pending the publication of a press release and until further notice. This suspension comes as the short-seller, Gotham City, unveiled before the opening of the market a note targeting the specialist in digital solutions for physical commerce.
He is interested in this one in the close links with its first shareholder, the Chinese group BOE Technology, which holds 32% of the capital. Stressing that he is its main shareholder, its largest supplier, one of its main customers and that he sits on the audit committee, he considers the risk of financial embezzlement to be high.
Gotham City considers the group’s financial statements “to be materially misleading, incorrect and deficient”. He claims 2020-22 revenue is overstated by at least 7-13% and 2022 EBITDA is overstated by 106%.
He also considers that the recently announced agreement with Walmart is not profitable for the specialist in digital solutions for physical commerce.
According to his analysis, SES Imagotag should trade between 15 and 30 euros per share, if the shares simply traded in line with peers. The stock closed yesterday at 166.80 euros. SES Imagotag is one of the success stories of the Paris market where its share has jumped 580% in 3 years.
Contacted by AOF, the company was not available for comment.
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Key points
– First world operator of telecom satellites, created in 1985 covering the entire world population with 74 satellites;
– Turnover of €1.88 billion drawn from video –distribution and related services- for 59% and networks –governments, mobility and data- for 41%;
– Two-point economic model: video: generate high self-financing and increase service quality, particularly in HD and OTT / networks: focus growth on 3 segments – data for telecoms and the cloud, mobility and secure connectivity for governments;
– Capital held at 11.58% of the voting rights by Luxembourg and at 10.88% by BCEE and SNCI and cannot accommodate another shareholder with more than 20.1%, Frank Esser chairing the board of directors 12 members, Steve Collar being general manager;
– Solid financial position -€5.7 billion in equity and free cash flow of €876 million against €2.5 billion in debt, i.e. a leverage effect of 3 at the end of June.
Challenges
– In a market that should double within 10 years, strategy aimed at revenue growth, higher than that of operating income and financial equilibrium;
– Innovation strategy: oriented towards 2 reservoirs of future growth: connected mobility applications in the air, maritime and automotive sectors, and data and cloud-related solutions, combining terrestrial and space applications / co-creating with customers incubation solutions;
– Environmental strategy: after CO2 emissions have been maintained at 40 Mt for 10 years despite the increase in activity, a reduction has been initiated since 2018 / waste reduction in space via the reuse of launchers and sending to an orbital graveyard;
– After an increase to €950m in 2022, sharp decline in industrial investments -€450m in 2023, €570m in 2024, €280m in 2025, €360m in 2026;
– Strategic acquisition of DRS Global, supplier of SATCOM solutions for the US government – $250m in additional annual revenues, $25m in annual synergies;
– Launch in 2022 of SES-17 (€930m of orders) and, at the end of the year, of 03bmPOWER which will secure turnover and operating profit from 2023.
Challenges
– Stock market volatility in relation to declarations by competitors Eutelsat and Inmarsat, mergers in the sector and the progress of mega-projects by Amazon, Google/Qualcomm or Starlink/SpaceX;
– Strengthening of the balance sheet thanks to the compensation by the American FFC, Federal Communications Commission, for the provision of “C-band”, in the amount estimated at €4 billion paid in 2 payments (after €1 billion in 2021 , €3 billion at the end of 2023);
– Rumors of merger with the American Intelsat, judged negatively by investors;
– After an increase of 32.6% in revenues and 11% in net profit on 1
er
semester, 2022 objectives confirmed: €1.75 to €1.81 billion in revenue, of which 90% secured and at least €1.1 billion in operating profit;
– Share buyback program.
Growth of the French market in value
According to the Gfk institute, the sector generated sales of 4.8 billion euros in 2021, up 2% compared to 2020. The product families that benefited from the best performance are in particular helmets and accessories as well as televisions. However, while the French consumer electronics market grew in value last year, it fell in terms of volumes (-2% with 51 million units sold). This trend can be explained by a move upmarket in products: Bluetooth speakers are more powerful or even television sets use more innovative technologies. Thus the development of technologies that improve image resolution (Oled, Qled, miniled) and the size of screens have caused an increase of more than 20% in the average price. Consumers are also looking for more sustainable products.