SATS

[CY09]

Hi BRT, there are 2 moving parts to look at.

First, the 1.8 cents EPS is based on the current reality of its existing business (excluding WFS). It is on the upturn with almost full reopening of air travel.

Second, the revised increase of EPS of only 0.1 cents EPS is the current reality of WFS business. As I mentioned previously: "WFS acquistion is coming down from a high because its profit grew tremendously during the covid boom as it is linked to air cargo. SIA cargo segment is a good proxy where utilisation and profits have fallen since the relaxation of measures. With the decline in volume due to the pandemic boom being over, Im not sure if WFS is able to replicate its EURO 66 million profits"

The new outlook is that the WFS acquistion is going to yield only a 0.1 cents EPS increase with synergy (about $11 mil profit). SATS is paying over 100 times price earnings on a business that is stagnating. Im not sure of the contractual arrangement SATS mgmt made with WFS but if there is room to renegotiate for a lower acqusition price or that there is a performance clause guranteed, then it is good; otherwise it is a very terrible corporate exercise conducted by the SATS mgmt in negotiating without safeguards.