Investors Chronicle recommend Avanti Communications and Inmarsat


Investors Chronicle features an article on the UK’s improved repute within the space sector during 2014, especially the Rosetta project. Lockheed, Airbus and Thales are all cited for their activity investing in UK resources. Satellite Technology and Telespazio are also cited. David Parker, the UK Space Agency’s CEO states that by 2030 global space commerce will probably rise to £400bn, and this is the reason that investors are critical to the UK if it is to “stay in the game and build on its growing success”.

The piece declares that ventures from the private sector are still in their infancy; in the past, space projects have been operated by agencies of governments, for example NASA. However the hurdles of complex technology and astronomical costs have not discouraged businesses like AVN (Avanti Communications) or ISAT (Inmarsat). It is suggested that the industry’s profit potential was too much for these companies to resist. Alcatel-Lucent (FR: ALU) and Inmarsat recently collaborated to produce in-flight fast broadband services aboard airliners, and Inmarsat itself has planned a launch next summer for the first ever ‘Ka-band’ high-speed broadband service. Avanti, currently supplying mobile operators like VOD (Vodafone) with data capacity via their satellites has fleet expansion plans to cope with the demands of rapidly expanding economies in the sub-Sahara areas of Africa among others.

IC views Avanti and Inmarsat as having potential, they are both going through an expedited growth phase; expectations of Cenkos analysts is for a growth in Avanti’s sales of 30% this year, and then for 2016 a further growth to $145m of 70%. However, neither of the companies look like a bargain buy, broker Jeffries’ prediction EPS of 59 cents is twenty one times less than Inmarsat’s current trading price of £7.84. Additionally, investment in the fledgling and somewhat volatile space industry is a high risk strategy; investors are advised to act in small steps.

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