Intangible assets have a value. SATS’ intangibles comprise relationships and trademarks acquired from WFS. Based on its intangible assets, SATS’ book value is nearer 25 cents rather than zero. Moreover, SATS’ 1QFY2026 Patmi for the three months to end-June rose by more than 9% to $70.9 million, translating into EPS of 19 cents on an annualised basis, up 15% y-o-y. If net profit continues to accrete, SATS can build up shareholder equity.
At any rate, stocks such as SATS are likely to be valued by price multiples rather than book value. Furthermore interest rates are falling which is positive for a company like SATS with lashings of debt to the tune of $2.5+ billion, of which most is short term debt. 3-month Sora has fallen by half this year which gives SATS the opportunity to refinance at lower levels.
All the analysts that cover SATS have either buys or accumulate. Interestingly PhillipCapital downgraded SATS from buy to accumulate because its share price had performed. This is unusual becaues by all metrics, it appears SATS’ share price has underperformed.
Whatever the case, technically, it appears that SATS’ share price is likely move sideways to higher given the positive crosses by its longer term moving averages.
See also: REIT Index points to upside as STI continues consolidation
REITs to catch up with stocks
The FTSE ST REIT Index (688) has cleared the top of a minor base formation at 660 and is headed for a minimum upside of 720, and probably higher. Apart from lower interest rates and positive asset and property management underpinning the large-cap REITs’ distributions per unit (DPU), risk-free rates are in a downtrend with local risk-free rates ending the month of August at 1.83% compared with 2.88% on Jan 2. REITs trading yields are priced off the risk-free rate through a yield spread. Hence lower risk-free rates equal compressed yields via higher REIT unit prices.
See also: STI to continue correction; here are the supports for Sembcorp, DBS and STE
Among the great and the good, Great Eastern Holdings started trading on Aug 21. While its price to embedded value remains at a discount, its P/E of 10.9x and its P/NAV of 1.3x is almost at the same level as those of OCBC and UOB. Based on its market cap, GEH is among the top 20 largest stocks on the SGX.
