KEY THEMES
A calm beginning of the week for global markets, with U.S. future equity indices broadly flat in early Monday’s trading. Meanwhile, Asians shares slipped on Monday in anticipation of hawkish Fed actions in the wake of strong U.S. jobs data. Furthermore, Brent oil prices didn’t move much in its weekly opening, with prices stable around USD93/bbl, after a remarkable 7-week winning streak. The situation in the oil market is anything but clear, as the notion of tactical tight supply is confronted by the slow progress in U.S. -Iran nuclear talks.
Elsewhere, NileSat [EGSA] has reported its preliminary figures for 2021. EGSA’s bottom line dropped 10% y/y to USD31mn on 11% weaker revenues of USD112mn. Despite the annual slippage, EGSA has a tremendous cash balance, which amounts to USD255mn as of Q3 2021. EGSA’s revenues have been on a downward trajectory since 2015, falling at a 7-year CAGE (2014-2021) of 7%. This has not come as a surprise since EGSA lost many main accounts as big corporates within the MENA region tightened their TV advertising budgets upon finding alternative advertising options. EGSA is awaiting to launch its new satellite (i.e. Nielsat 301) in 2022, which help EGSA offer different services beside its traditional ones. Those services will include internet transmission along with other new services. That said, EGSA is a pure dividends play, offering a phenomenal USD based DY of c.10%. We note that EGSA is one of the 15 stocks we picked in our annual STANDPoint strategy report published on 30 January 2022. We have an Overweight rating on EGSA with a 12MPT of USD6.6/share (ETR +50%). EGSA has a negative enterprise value of USD91mn, since its net cash position represent a whopping 155% of its current market cap.