ValueBuddies.com : Value Investing Forum - Singapore, Hong Kong, U.S.

Full Version: SATS
You're currently viewing a stripped down version of our content. View the full version with proper formatting.
Pages: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
Can someone share with me why does one use EBITDA.
Sats has huge depreciation. Using EBITDA would assume the depreciated items requires no replacement cost?
as stated i would rather use free cash flow, but using EBITDA is valuing the cash the business generates regardless of replacement. perhaps replacement problems will surfaced later on but purly from valuation what is acceptable for PE, EV/EBITDA and P/Free Cash flow will be rather different.

i am just stating because thats what is shown on the "balance sheet"
(06-06-2013, 01:36 PM)violinist Wrote: [ -> ]
(06-06-2013, 12:04 PM)Dividend Warrior Wrote: [ -> ]Strong balance sheet.....Smile

[Image: SATS+Summary+earnings.JPG]

This is not a balance sheet.

My bad. Correction.

Earnings Summary.

[Image: SATS+Summary+earnings.JPG]


Figures for 2014 and 2015 are just imagination of some analyst.

Investor Presentation! Big GrinBig Grin
http://info.sgx.com/webcoranncatth.nsf/V...penelement
For comparison, here the latest earnings summary from Kim Eng:
[Image: SATS-SummaryEarnings_zps1ad02ac6.jpg]

Infinitely more useful than an outdated earning summary. Now with 2016F figures! Smile

Source: If Dividends Be The Food Of Investors, Then Pay On!
The beauty of many analysts that they paint higher revenue, profits, ROE in the near future for the stocks they are covering with buy/hold. And can someone explain why they are giving such EPS growth for SATS over the next 2 years?

There was an increase in EPS growth projection for FY 2014 between the old and updated versions
(06-06-2013, 02:56 PM)Salty Wrote: [ -> ]Can someone share with me why does one use EBITDA.
Sats has huge depreciation. Using EBITDA would assume the depreciated items requires no replacement cost?

Like what you pointed out, Warren Buffet also spoke against the reliance on EBITDA as depreciation is not covered. However, EBITDA can be used as a simple proxy to operating cashflow; and "EBITDA minus capex" a simple proxy to enterprise free cashflow.

Specific capex forecasts will be more useful than historical depreciation as:
future costs may be different from past costs
depreciation is based on estimated useful lives - some assets may be disposed earlier or continued to be used even after fully depreciated.

Private equity and IBs may also rely on EBITDA rather than net income to gauge business viability as they can manage interest and tax separately through corporate finance (D/E) and tax planning.

Hope this helps.
If we were to put both tables side-by-side, we'd now be better able to appreciate this Warren Buffett quote,

“Forecasts may tell you a great deal about the forecaster; they tell you nothing about the future.”

[Image: SATS-SummaryEarnings_zps1ad02ac6.jpg][Image: SATS+Summary+earnings.JPG]

Left : Courtesy of 'lonewolf'
Right : Courtesy of 'Dividend Warrior'

When I first saw DW's table, the immediate giveaway that something wasn't right was the high yield of >6% (also the PE).... I doubt there're any blue chips now at >6% yield, even after the recent pull-back in prices....

Perhaps it'd be good if DW explains what he's trying to achieve by posting that outdated table and the one-liner 'Strong balance sheet.....' ?? Looks very misleading to me...Rolleyes
DW just sold his k green and bought SATS
DW needs help pushing his stocks higher? ^^

at 20 times earnings I do feel SATS to be a bit overvalued, I think 12-15 times earnings would be more fair given the low growth, however I like SATS for its net cash positon

not vested
Quote: Can someone share with me why does one use EBITDA.
Sats has huge depreciation. Using EBITDA would assume the depreciated items requires no replacement cost?
Quote:Like what you pointed out, Warren Buffet also spoke against the reliance on EBITDA as depreciation is not covered. However, EBITDA can be used as a simple proxy to operating cashflow; and "EBITDA minus capex" a simple proxy to enterprise free cashflow.

EBITDA is probably useful for comparison of similar operation at different locations with different depreciation. In the case of Marina Sands Bay, their casinos are all over the world with different depreciation and the easiest way to benchmark the earning of all casinos is to use EBITDA.

Sometimes, some companies are pretty aggressive in charging to depreciation and gives the false idea to investors that the net profit is not that great and, vice versa.
(07-06-2013, 12:20 AM)fat al Wrote: [ -> ]
(06-06-2013, 02:56 PM)Salty Wrote: [ -> ]Can someone share with me why does one use EBITDA.
Sats has huge depreciation. Using EBITDA would assume the depreciated items requires no replacement cost?

Like what you pointed out, Warren Buffet also spoke against the reliance on EBITDA as depreciation is not covered. However, EBITDA can be used as a simple proxy to operating cashflow; and "EBITDA minus capex" a simple proxy to enterprise free cashflow.

Specific capex forecasts will be more useful than historical depreciation as:
future costs may be different from past costs
depreciation is based on estimated useful lives - some assets may be disposed earlier or continued to be used even after fully depreciated.

Private equity and IBs may also rely on EBITDA rather than net income to gauge business viability as they can manage interest and tax separately through corporate finance (D/E) and tax planning.

Hope this helps.

EV/EBITDA was used as a measure in the 80s during the LBO heydays.

It made a lot of FINANCIAL sense back then because the LBO firms strip out cash and reduce capex, repackage and try to resell it. Obvious problem in the longer run as many pointed out is maintenance capex cannot be ignored in the long run.

People nowadays use EBITDA as a proxy for cashflow, or maybe even without understanding.

PS I agree with Yeokiwi as well. Best thing is still look at cashflow rather than the EBITDA "shortcut"
Pages: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26