לונג
YAHSAT a chance to make 10% on a stable & very predictable stock
מעודכן
ADX:YAHSAT
Al Yah Satellite is a company that builds/buys satellites and launches them into space. While it is a public joint stock company, it is really a semi-government company, a subsidiary of Mubadala, with heavy ownership by UAE top leadership.
They currently have 5 satellites in orbit. The satellites basically provide broadband internet service, backhaul (connections between networks), and mobile voice & data service.
This stock moves very predictably for the following reasons:
1) The stock has shares outstanding of 2.44 billion, the float is less at about 975 million shares. Float (shares available for trading and not in the hands of long-term holders) is likely even less than 975 Mil but just not officially disclosed. Meaning more than 60% of the stock are long-term holders.
2) But these are not your average owners. They are not long-term investors looking to make money. They are strategic owners that will never sell. Selling YAHSAT has sovereignty implications. This is a company really that should’ve never been public. It should always be government owned. They are intertwined with defense. Thus, the public portion will always be minor and incapable of impacting the company decisions.
3) The company also essentially has only one customer, the UAE government, specifically the armed forces. It is trying to venture into the commercial markets but still with limited success.
4) YAHSAT has recently renewed their contract with the government that was set to expire in 2026 and now it will expire in 2043. So, they will now have a stable income for the next 20 years.
5) They pay 6-7% dividend every year.
6) The stock is deeply undervalued. It has good financials and a DCF model intrinsic value of 8 dirhams per share (5 yrs our). So, it’s trading at a deep discount (see financials on chart below)
All of the above provides support every time the stock dips. If you look at the chart above, you can see that YAHSAT stock does indeed move very predictably. It zigs up 8-10% and then zags down 6-11%.
Figure 1: chart with key financials and intrinsic value only. For trading signals see the first posted chart.
The company recently announced the good news of renewing their contract with the UAE government for 20 years. Thus, the stock shot up 9%. Now it’s going to correct and drop down by about 11% to the shown cyan arrow. Why? Simple, this company doesn’t have a lot of news. It’s a satellite company! They already made their big announcement. You can buy it earlier at the shown blue arrow and then average down at cyan arrow for a two-tier entry if you wish.
You can place a stop loss at 10% lower for a 1:1 Risk to Reward ratio but I calculate the stop to be reasonably safe at a price of 3.34 AED per share (3.7% stop loss). Profit target is still 10% giving you a reward that’s 3x the risk. Not bad.
One disadvantage is the stock has an ATR of 1.66% per day so it will take it some time to reach 10%. But the future looks bright for YAHSAT. They are going to launch two new satellites by 2028 which according to them will bring in 20 times more capacity than their entire current fleet of 5 satellites. And they have already sold half of that future capacity to the UAE government. The remaining half is available for sale to new potential customers, so there is upside potential.
I will buy YAHSAT at cyan arrow and target a 10% return. This is what I am doing with my money. You do you.
Good luck.
Al Yah Satellite is a company that builds/buys satellites and launches them into space. While it is a public joint stock company, it is really a semi-government company, a subsidiary of Mubadala, with heavy ownership by UAE top leadership.
They currently have 5 satellites in orbit. The satellites basically provide broadband internet service, backhaul (connections between networks), and mobile voice & data service.
This stock moves very predictably for the following reasons:
1) The stock has shares outstanding of 2.44 billion, the float is less at about 975 million shares. Float (shares available for trading and not in the hands of long-term holders) is likely even less than 975 Mil but just not officially disclosed. Meaning more than 60% of the stock are long-term holders.
2) But these are not your average owners. They are not long-term investors looking to make money. They are strategic owners that will never sell. Selling YAHSAT has sovereignty implications. This is a company really that should’ve never been public. It should always be government owned. They are intertwined with defense. Thus, the public portion will always be minor and incapable of impacting the company decisions.
3) The company also essentially has only one customer, the UAE government, specifically the armed forces. It is trying to venture into the commercial markets but still with limited success.
4) YAHSAT has recently renewed their contract with the government that was set to expire in 2026 and now it will expire in 2043. So, they will now have a stable income for the next 20 years.
5) They pay 6-7% dividend every year.
6) The stock is deeply undervalued. It has good financials and a DCF model intrinsic value of 8 dirhams per share (5 yrs our). So, it’s trading at a deep discount (see financials on chart below)
All of the above provides support every time the stock dips. If you look at the chart above, you can see that YAHSAT stock does indeed move very predictably. It zigs up 8-10% and then zags down 6-11%.
Figure 1: chart with key financials and intrinsic value only. For trading signals see the first posted chart.
The company recently announced the good news of renewing their contract with the UAE government for 20 years. Thus, the stock shot up 9%. Now it’s going to correct and drop down by about 11% to the shown cyan arrow. Why? Simple, this company doesn’t have a lot of news. It’s a satellite company! They already made their big announcement. You can buy it earlier at the shown blue arrow and then average down at cyan arrow for a two-tier entry if you wish.
You can place a stop loss at 10% lower for a 1:1 Risk to Reward ratio but I calculate the stop to be reasonably safe at a price of 3.34 AED per share (3.7% stop loss). Profit target is still 10% giving you a reward that’s 3x the risk. Not bad.
One disadvantage is the stock has an ATR of 1.66% per day so it will take it some time to reach 10%. But the future looks bright for YAHSAT. They are going to launch two new satellites by 2028 which according to them will bring in 20 times more capacity than their entire current fleet of 5 satellites. And they have already sold half of that future capacity to the UAE government. The remaining half is available for sale to new potential customers, so there is upside potential.
I will buy YAHSAT at cyan arrow and target a 10% return. This is what I am doing with my money. You do you.
Good luck.
הערה
Just clarifying. In the article above I say the stop should be at 3.34 AED and obviously I mean 2.34 as the price is already below 3 AED when I posted. Also, on the chart the horizontal support level shown was shifted by mistake to 2.37. It should be at 2.34 as that is the stop level. Apologies for the error.
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