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UAE’s flagship satellite solutions provider Al Yah Satellite Communications (Yahsat) reported a strong first-half (H1) net profit of AED167 million (US$45 million), with a strong net profit margin of 22.1%.
Yahsat’s first-half revenue hit a record AED755 million, up 8.1% year-on-year, supported by double-digit growth in hosted and mobile solutions.
Adjusted EBITDA was AED448 million, up 5.3% year-on-year, delivering a strong margin of 59.3%.
future income
Future revenue from contracts exceeds AED7.7 billion, equivalent to 5.2 times annual revenue in FY21.
The company’s strong financial position and high visibility into future cash flows underpin its ability to invest in growth and maintain an attractive dividend policy.
FY22 dividend expected to grow at least 2% to 16.12 fils [$4.39 cents] Amount per share or AED 393 million, to be paid in two equal instalments, to be paid around October 2022 and May 2023, respectively.
The lower end of FY22 revenue guidance was increased from AED1.52 billion to AED1.54 billion; all other guidance remained unchanged.
The second season is dazzling
Yahsat’s growth momentum continued in the second quarter of 2022, with revenue of AED392 million, up 6.9% year-on-year. This resulted in an 8.1% YoY increase in H122 revenue to AED755 million. Hosted Solutions and Mobile Solutions both performed well, with H122 revenue up 35.1% and 24.1%, respectively.
Q222 Adjusted EBITDA was AED235 million, up 3.9% year-on-year, yielding a healthy margin of 59.8%, while net profit (profit attributable to shareholders) was AED93 million, up 77.9% year-on-year. Year-to-date, the group recorded H122 adjusted EBITDA growth of 5.3%, net income growth of 50.7%, and net income margin of 22.1%.
The group’s contracted future revenue remains strong at over AED 7.7 billion as at 30 June 2022 [$2.1 billion]equivalent to about 5.2x FY2021 revenue, up 4.1% since the start of the current financial year, supported by AED 909 million over the 5-year period [$247 million] Managed Services Authorization granted by the UAE Government in February 2022.
The highest income in the first half of the year
Musabbeh Al Kaabi, Chairman of Yahsat, commented, “Against the backdrop of challenging global economic headwinds, we are pleased with the record first-half revenue, along with a significant increase in Adjusted EBITDA and Net Income. This reflects the strength of our business, which Benefited from strong contracted future revenue and positive momentum across operating segments. Given our strong year-to-date performance, the Board’s confidence in future cash flow generation, our ability to grow our business and the company’s financial strength, we reiterate our commitment to providing The promise of attractive returns for shareholders.”
Ali Al Hashemi, CEO of Yahsat Group, commented: “Yahsat has delivered extraordinary results, recording its highest ever first-half revenue and demonstrating our performance-oriented culture to deploy innovative capabilities and grow our business. Contracted future revenue exceeds AED7.7 billion, equivalent to 5.2x annual revenue in FY 2021. Going forward, we remain on track to put our next-generation satellite Thuraya 4-NGS into commercial service in the second half of 2024, while considering a 2026 Launched two new satellites in 2020, Al Yah 4 and Al Yah 5. We remain very confident in our short- and long-term prospects and have raised the lower end of our fiscal 2022 revenue guidance accordingly, while reaffirming our commitment to paying progressive dividends.
“We remain committed to pursuing and launching new growth opportunities across our business and we believe Yahsat’s strong balance sheet, business resilience and track record of delivering exceptional performance will enable us to capture significant value to drive long-term growth. “
Attractive dividend outlook
Yahsat reiterated its commitment to grow its dividend by at least 2% annually, reflecting the board’s confidence in cash flow generation and the overall financial strength of the business.For fiscal 2022, the expected total dividend is at least 16.12 Phils per share [US Cents 4.39], divided into two equal instalments to be paid around October 2022 and May 2023. This represents a total dividend payment of AED 393 million. The company’s dividend policy is underpinned by its high cash conversion ratio (93.1% for H122), solid balance sheet (0.9x net debt/EBITDA as of 30 June 2022) and strong discretionary cash flow (expected to be around approx. Twice) is well supported by the FY22 dividend payment).
Increase in minimum income guidance
Given the strong performance of H122, and considering that approximately 90% of the remaining projected revenue for fiscal 2022 has been secured (based on the low end of its revenue guidance), Yahsat has decided to narrow the range of its fiscal 2022 guidance provided on March 1, 2022 .
The company has now raised its projected 2022 revenue to at least AED1.54 billion, while the upper end of the range remains unchanged at AED1.62 billion. All other guidance remains the same.
Senior management appointments
On 1 July 2022 (post-period event), Yahsat announced the appointment of Sulaiman Al Ali as Chief Commercial Officer (CCO). Al Ali has been with Yahsat for eight years, previously as Director of Government Solutions at Yahsat and later as CEO of Thuraya, where he has been instrumental in driving operational excellence and delivering new and innovative solutions to customers, building a platform for strong future growth . In his new role, Al Ali will lead Yahsat’s data solutions divisions YahClick and Thuraya, responsible for driving synergies and growth in these commercial businesses to create value for customers and partners. He succeeds Farhad Khan, who held the role for six years and was a key player in the expansion of YahClick’s business into new and existing markets.
infrastructure
In the second quarter of 222, infrastructure accounted for approximately 55% of the group’s revenue, mainly comprising a 15-year long-term capacity services agreement with the UAE government. Total revenue was broadly stable at AED 218 million. Infrastructure business provides strong visibility into future cash flow, with contracted future revenue of approximately AED6.5 billion as at 30 June 2022, including a 15-year T4-NGS capacity services agreement worth AED2.6 billion , the protocol will be supported from 2024 onwards. Yahsat remains well-positioned to further develop its infrastructure business and is considering two potential new satellites (Al Yah 4 and Al Yah 5), scheduled for launch in 2026.
Managed Solutions
Managed Solutions, which accounted for approximately 22% of the Group’s revenue, continued its strong performance with a 41.4% increase in Q222 revenue, resulting in H122 revenue of AED144 million, up 35.1% year-on-year. This is thanks to a 5-year mandate worth AED 909 million awarded in February 2022 to provide enhanced hosting services for the UAE government’s satellite communications capabilities from January 2022. AED 86 million of this award was recognised during H122. In Q222, the business continued with the award of other contracts including the design and delivery of AED 28 million worth of advanced satellite communications for UAE government platforms Build its contractual future income. Management expects the strong momentum in the managed solutions business to continue in the second half of 2022.
Mobile Solutions
Mobility Solutions, which accounts for about 17% of group revenue, had another stellar quarter with Q222 revenue up 7.8% year over year. H122 revenue increased by 24.1% over the previous year, with strong growth in both services and equipment revenue. Services revenue increased 6.5% with double-digit growth across multiple business segments including voice, data and cross-carrier. Meanwhile, equipment revenue grew by 95%, continuing to benefit from a three-year AED316 million distribution agreement secured in 2021.
data solutions
YahClick’s revenue in H122, which accounted for about 5% of the group’s revenue, declined slightly by 4.4% year-on-year, mainly due to the closing of H121 revenue in July 2021 with a multi-year opportunistic capacity transaction contributing AED8 million. The business continues to be a solid foundation for future growth, with the consumer broadband business’s subscriber base growing 11% year-to-date and 24% year-over-year, helped by expansion across Africa. In addition, it signed an agreement to connect schools across Zimbabwe, launched several cellular backhaul projects, and signed some new orders for managed network services.
Balance Sheet and Cash Flow
The group’s balance sheet remains solid. As at 30 June 2022, net debt was AED812 million and leverage ratio (net debt to adjusted EBITDA) was 0.9 times. Combined with AED224 million in discretionary free cash flow and a cash conversion ratio of 93.1%, the group is well positioned to meet its growth and capital expenditure commitments and maintain its attractive dividend policy. arab trade news agency
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