The Speedcast International Ltd (ASX: SDA) share price has gone up 40% over the past two days.
Speedcast International is a satellite services company with operations stretching from Brisbane around to Perth. Ships, mining companies, Government groups and other parties can use their services for communication.
Speedcast’s Soaring Share Price
Since the start of July 2019, the Speedcast share price is down almost 70% – even including the excellent share price recovery over the past couple of days.
At the start of July, the company updated the market about its earnings expectations. Underlying EBITDA (click here to learn what EBITDA means) guidance was downgraded due to weaker operating conditions, delays of Phase 2 of the NBN project, increased churn, technical difficulties and a lower contribution from Globecomm.
In the half year result Speedcast reported a statutory net loss of $175.5 million due to a $154.8 million from the impairment of goodwill relating to the performance of its non-Government operating segment.
Net debt also increased to $625 million for the period, up from $586 million at 31 December 2018.
However, the company is still expecting solid growth over the medium term from the Maritime segment with increased commercial shipping and in cruise where bandwidth needs continue to grow according to Speedcast.
Speedcast also expects the Government segment to grow with higher defence spending and revenue synergies from the Globecomm integration expected in 2020.
In the second half of FY19 the company is expecting cost savings, synergies and moderate organic growth with full year EBITDA guidance of $150 million to $160 million.
It seems the fall in share price has attracted a major investor. After the market had closed yesterday, Mitsubishi UFJ Financial was revealed to have taken a 5.46% stake, or 13 million shares.
For a large investor to take a stake like that, it takes a lot of buying and is a vote of confidence. Perhaps this is the bottom and Speedcast will recover somewhat? It’s hard to say, telecommunication shares have been punished recently. I’d rather buy shares of the reliable shares in the free report below instead.
At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.