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NWT - Newsat Limited

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The expected launch of Jabiru (on a French Ariana rocket) seems to have attracted some anticipatory buying.
The chart pattern suggests a bottom could be in place with lift-off proper to be sparked when resistance at 39c is overcome.

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Some of my money is already on a successful launch.
 
skc said:
$3.5B revenue over 15 years = $230m per year. At 70% margin = $160m. Take another $10m away for a bit of corporate leakage and pay 30% tax after allowing for $40m depreciation per year, that's ~$125m cashflow over 15 years. Discount that at say 12% you get a NPV of $850m. But the satellite itself costs $600m. So net NPV is only $250m in 2014. Take it back to today it's $200m.

232m shares on issue so ~86c per share + a bit of the existing resale business + premium for Jabiru-2,3,4 etc.

Let's just sa they raise $200m @ 60c that's 333.33m additional shares, bringing the total to 565m shares on issue. The project NPV is $400m, or 70c a share + various knobs and bobs.

Not greatly oversold based on my 10 minute assessment. You only need the discount rate to be 15% for today's price to look relatively reasonable.
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Just read an article on NWT today and thought I'd re-work my earlier calculations and see how things looked 2 years on.

http://www.sharecafe.com.au/cafetake.asp?a=AV&ai=29897

Just how ambitious are NewSat’s plans can be judged from the fact that when the company set out to fund Jabiru-1, the $600 million funding task was ten times the company’s then market capitalisation. But NewSat has raised $500 million in debt (mainly from US and European export credit agencies) and vendor finance, and $105 million in equity, to mount the project, which involved commissioning a $268 million satellite from Lockheed Martin and a $116 million rocket to get it into space, from Arianespace in France.

However, NewSat has already secured US$644 million worth of binding pre-launch bandwidth contracts for Jabiru-1, equivalent to about one-fifth of capacity. The company expects that proportion of pre-sold capacity to be about 60% at launch date, which it says would generate revenue of up to $3 billion over 15 years, or $200 million a year, and earnings before interest, tax, depreciation and amortisation (EBITDA) of about $150 million a year.

To put that in context, NewSat’s revenue in FY13 was $39.3 million, and EBITDA was $12.1 million.

If Jabiru-1 were to reach capacity of 90% – which NewSat says is common in similar satellites – that would be $4 billion of revenue, or close to $220 million of EBITDA every year for 15 years.
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So let's work with $200m EBITDA every year for 15 years. What's the NPV for such a project? Looks like cash flow won't start until 2015/2016. Debt is $500m so interest say @ 3.5% ($390m of the debt from US Ex-Im Bank @ only 3%) = $17.5m p.a. Assuming linear D&A over 15 years and tax of 28.5%, I get steady state cashflow of ~$140m per year for 15 years starting in 2015. Discounting at 12% gives a NPV of $860m. Now they presumably need to pay back the $500m in debt, so the NPV is ~$360m. Depending on debt repayment profile (they may pay the debt back earlier), this number could go up to $390m.

Today there's 612m shares on issue so the value of the Jabiru-1 is ~58-63c per share. This however assumes no value on the existing buisness (which made a loss in the latest half), over 60% capacity in use, and that management returns the cashflow to investors (or invest it to generate return > discount rate). The choice of 12% discount rate may or may not be appropriate given there's still construction, launch and sales risks, but there seems to be enough margin in NPV terms over current share price of 30c on offer.
 
These business very similar to airlines, high cost, high maintenance low return and your local telco can always price you out
 
There has to be more to this move than a few reports of old news, it's been well telegraphed that there has been management movements before June 30 per the ASX announcements. Also a director has been piling into the stock like no tomorrow based on other ASX announcements.

I have seen this fall from 48c (my first buy) to mid 25's and was quite stable. But today's drop seems to have come from nowhere. Has there been talk of another delay in the launch date for their satellite?



PS> Junior - I couldn't see that Eureka report as it asked for a log in - still waiting for admin to grant me access.
 
A Green beacon in a sea of Red?
I'm accumulating at these levels - let's break the trend line :)

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skc said:
Today there's 612m shares on issue so the value of the Jabiru-1 is ~58-63c per share. This however assumes no value on the existing buisness (which made a loss in the latest half), over 60% capacity in use, and that management returns the cashflow to investors (or invest it to generate return > discount rate). The choice of 12% discount rate may or may not be appropriate given there's still construction, launch and sales risks, but there seems to be enough margin in NPV terms over current share price of 30c on offer.
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Well... RIP NWT.

No amount of analysis can trump bad corporate governance... and that should always be a risk factor in any thorough due diligence.

http://www.theage.com.au/business/newsat-and-bob-hawke-the-satellite-spruiker-20150417-1mmz55.html

For the record, I actually bought some at 30c back in June last year. The position was only small to ensure me a chance to participate in any capital raising. I sold the stock @ 20.5c on 1 Aug 2014 when the problems first appeared (which they disclosed in a speeding ticket response). A big loss percentage wise but it was less than 0.5% damage to the overall portfolio.
 
I was always amazed how Adrian Ballantine managed to keep this company going by paying in shares. Always felt precarious to me so did not own any but it is a sad day for Australia.
I remember Anthony Horseman loving this company when asf was new.
I think Ballantine did a good job really but a big backer was needed.
 
This business model failed regardless of management, you can have a superb management but this business will still failed eventually ... Understand the business model and you never ever lose money in this sort of business.

Bad management just accelerate its demise
 
An interesting postscript to the Newsat saga courtesy of ASIC.

Former Newsat CEO Adrian Maxwell Ballintine and Melbourne accountant Jason Dermot Cullen to stand trial over the making of invoices that were false or misleading contrary to section 1308(2) of the Corporations Act that allegedly caused Newsat to make payments of $357,000 and $275,000 to private companies associated with Mr. Ballintine and Mr. Cullen.

https://asic.gov.au/about-asic/medi...o-of-newsat-limited-committed-to-stand-trial/
https://asic.gov.au/about-asic/medi...elbourne-accountant-committed-to-stand-trial/
 
greggles said:
Adrian Ballintine sentenced after pleading guilty to one charge of authorising the making of false or misleading statements in documents required by, or for the purposes, of the Corporations Act.

Fined $15,000 and automatically disqualified from managing a corporation for five years.

https://asic.gov.au/about-asic/news...eleases/20-054mr-former-newsat-ceo-sentenced/
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Pathetic. Took that many years to get a slap on the wrist?

Used to follow newsat years ago. I have a negative investment interest in small companies that take on big projects. The projects are a usually goer but the company usually goes broke or is recapitalised as the capital required often exceeds the original estimates. NWT was clearly on that trajectory - and then throw in all the drama with Luxury Yachts, trips, etc. etc.
 
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