SATS soaring higher and higher

Less than 2 weeks ago, I wrote about SATS here and predicted that Q2 would be an excellent quarter. I'm happy to say I'm right =D

This dragon has soared to the skies!

Credit: SATS quarterly presentation slides

2Q EPS soared 28.5%.
1st Half 2015/16 EPS up 22.2%

SATS is on a productivity gain overdrive by focusing on automated processes and cutting down on manpower. This helped the company to achieve remarkable results.

SATS is somewhat like Sheng Siong

• Cost control measures helped boost their bottomline
• Low debt (no debt for Sheng Siong)
• Excellent free cash flow (gushing with cash!)

So, would I buy more of SATS with this set of goods result?

Its important to buy good businesses. Its equally important to buy good businesses at good prices with sufficient margin of buffer.

	May-15	Oct-15
Share price	$3.19	$3.98
Share price % change		25%
EPS % change		22%

Seems like the market has already fully priced in the set of good results. Unfortunately, this doesn't seem like sufficient buffer for me.

Dividend payout ratio

EPS 19.8 (annualised)

DPS 14.0 (assume same as last year)

Payout ratio 70.7%

FCF/share 15.7 (assume comparable with last year)

Payout ratio 89.1%

Dividend for this year, if remained the same, is still sustainable. 

One small concern though, is the declining revenue is somewhat affecting the free cash flow of SATS. SATS would need to find ways to improve its top line to boost its free cash flow.

Nonetheless, awesome quarter for SATS!