AsiaSat’s good result soured by sluggish US economy

Asia Satellite Telecommunications Holdings Ltd (AsiaSat) reported promising figures for its final results for the year ended December 31, 2000 – but the lagging US economy seems to be taking the edge of the Asia Pacific regional recovery.

Its turnover for the year was up 24 per cent on the previous year to HK$997 million (E138m), while profit attributable to shareholders was up by some 63 per cent to HK$576m. Earnings per share were also up by 63 per cent to HK$1.48, compared to the figures for 1999.

The company said 67 per cent of AsiaSat 2 and 62 per cent of AsiaSat 3S’s transponder capacity was being utilised. AsiaSat 1 will continue to operate in an inclined orbit at 122 degrees East until the launch of AsiaSat 4, planned for 2002.

Banker Unterberg Towbin says AsiaSat’s market outlook is currently not strong, and even though local economic depression have improved, the region is now said to be experiencing the effects of America’s sluggish economy. “Perhaps more significantly,” says senior analyst William Kidd, “the demand for Ku-band capacity in the Asian market continues to be weak. Take-up rates on the part of DTH video providers in India and China have not yet materialised and the delays associated with those ventures seem to be growing, a concern we had at initiation.”

Indeed, Kidd suggests AsiaSat’s stock be considered with the utmost caution, saying, “Although the business case for AsiaSat remains very strong, we feel that the opportunity in SAT shares is constrained by the company’s ability to secure contracts with India and China DTH service providers.

“While we perceive the outcome of each of these events as binary, we don’t feel that a favourable outcome, for either market, is any closer to materialising than it was at the time of our initiation in December, making it difficult for us to get excited about the stock.”