Natixis Analyzes Investor Strategy for SES' Busy Nine-Month Launch Schedule

European satellite operator SES has produced solid financial performances recently, but with six satellites due to be launched over the next nine months, the company may struggle with to keep shareholders calm given the risk of failure, analysis firm Natixis said in a research report published Sept. 26.

Including those six launches, SES has a total of 12 launches planned for the future. Four missions will launch Ku-band satellites and another eight will carry O3b satellites. Natixis said this period would be crucial for SES’ growth going forward.

“To gauge how the market prices the risk of a satellite launch failing, we looked at a sample of 31 successful and unsuccessful launches carried out by Eutelsat and SES since 2006,” Natixis said in the report. “Based on this and excluding unusual market conditions, we see that with a successful launch the stock underperforms the market for 10 days ahead of the launch and outperforms on the day itself and for the following 10 days.”

The report noted that Eutelsat and SES traditionally underperform the CAC 40 for the 10 days preceding the launch of their satellites due to the risk inherent with any launch, but Natixis added that the data seems excessive.

“Unsurprisingly, on the day of a successful launch, Eutelsat and SES outperform the index and continue to do so for the following ten days. This relationship is not confirmed for Eutelsat. This is due only to the high degree of volatility for the CAC 40 in the 10 days after the launch of Atlantic Bird 7 in September 2011, with the index gaining 9 percent while Eutelsat shed 1 percent. Excluding this launch, the relationship holds true, with Eutelsat outperforming the CAC by 0.4 percent on average,” Natixis said. “These results prompt us to confirm our preference for Eutelsat at this time.”

SES recently contracted Space Exploration Technologies (SpaceX) to launch three additional SES satellites on Falcon 9 or Falcon Heavy rockets – a deal that was completed through SES’ affiliate company SES-SL. The first of these new launches will take place in 2015. SpaceX won a previous launch agreement with SES in March 2011 to place the SES-8 satellite into orbit in 2013 – one of the launches scheduled during this crucial nine-month period.

SES President and CEO Romain Bausch said all four Falcon missions would support the enhancement of SES’ global fleet of satellites. “SES was the first leading commercial satellite operator to place a launch contract with SpaceX and we eagerly await the launch of SES-8 in 2013,” Bausch said in a statement. “This new contract is testimony to our belief in SpaceX’s product and technical abilities. It also confirms SES’ priority for diversification of launch service providers and for securing timely access to space. We look forward to a long-term relationship with SpaceX.”
SES will not only be launching satellites, but also its Ka-band SES Broadband satellite service in November, pending the launch and beginning of operations of its Astra 2F satellite.

Astra 2F is currently scheduled for launch on Sept. 21 and will be located at the 28.2 degrees East orbital slot. The service will offer download speeds of up to 20 megabits-per-second (Mbps) and upload speeds of up to 2 Mbps and be marketed through SES partners NordNet, Vivéole and WIBOX to end-consumers in France. SES also signed a cooperation agreement with Gilat Satellite Technologies and Newtec to set up the hub infrastructure and to deliver the end-user terminals for the Ka-band service to its customers.

“With Astra 2F and the subsequent launches of Astra 2E, Astra 5B and Astra 2G in 2013 and 2014, we will be able to further expand our satellite broadband service in Europe with the additional Ka-band capacity on our fleet,” SES Broadband Services Managing Director Patrick Biewer.

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Natixis Analyzes Investor Strategy for SES’ Busy Nine-Month Launch Schedule