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John Menzies Share Discussion Threads
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|They say leave something for the next man - I'm beginning to think I left too much when I sold! Good luck chaps.|
|Well we've just gone through the Peel Hunt 630p target.
700p Berenberg (target increased from 660p on 16th March)
I thought this was an interesting line in the results:
"The Company has considered the accounting treatment under IFRIC 14 of the current deficit and the impact of the minimum funding requirement committed by the Company to 2025. A review of the Fund Rules has confirmed that the Group has an unconditional right to a refund of a projected future surplus at some point in the future."
I had assumed that any surplus arising should interest rates (and therefore discount rates) rise in future would be locked in to the pension fund. But it looks like there is a chance of getting the cash out again.|
|Not much excitement in the market it would appear.
Peel Hunt reiterates its 630p target and "Add" rating.
As usual with full-year results I am left pondering the question: Are the shares "cheap" or "expensive" in multiple terms?
On an "adjusted" basis they look relatively cheap: About 12 times historic earnings.
On a statutory basis they look expensive: Nearly 50 times historic earnings.
And they have an appalling history of adjustments. If I take the last 5 years, then the difference between adjusted and statutory earnings, according to my records, has been:
2012 37.5p (68.8 underlying vs 31.3 statutory)
2013 15.5p (65.6 vs 50.1)
2014 26.5p (49.2 vs 22.7)
2015 26.2p (42.7 vs 16.5 [before restatement])
2016 36.0p (47.8 vs 11.8)
So although the specifics of the adjustments may be "one-offs", clearly the business has a history of significant adjustments. This year can presumably be expected to contain some chunky one-offs related to integration of the ASIG acquisition as well as the "usual" contract amortisation.
Still, I think my glass is half-full rather than half-empty this morning. Great to see aviation back to form, accounting for more than 50% of underlying operating profit. The outlook is good and there is a deadline of the Interim announcement in the calendar for an update on the Group "structure" review.|
|Yes - an update on ASIG integration would be appreciated.|
|I'd completely missed that they've already announced (on 1st Feb) completion of the ASIG acquisition. So that's one thing less to worry about.|
|I'm with you entirely 1GW. And we need to see progress on unlocking value.|
|And just bought the rest back now, again at close to the sale price. So nothing won (other than access to cash for a time for other ideas), but very little lost on that trade idea.
Now hoping that in Wednesday's results the upside from the translation of overseas earnings at the lower £ exchange rate will be greater than currently built into the price. Also perhaps some (positive) news on the progression of the acquisition.|
|Bought some of them back just now at virtually the same price as my last sale. Doesn't look like a fall back to the ex-rights price is coming ahead of results and I'd like to have the bigger position for 8th March.|
|Perhaps the stronger cable most recently will provide an opportunity to add.|
|That's a great write-up from Milkwood, thanks - good to see another bull in the camp.
I'm still hoping for a more significant pullback towards the initial theoretical ex-rights price (call it 540p-ish) ahead of results, in order to buy back my pre-TU sales, but maybe that ship has sailed...|
|Looking at Bloomberg this was released yesterday
Milkwood Capital Likes Menzies, Sees Up to 50% Upside
By Melissa Karsh
Milkwood Capital is bullish on John Menzies Plc, according to Rhys Summerton, founder and chief investment officer of the global equity long-short hedge fund.
The Scottish company, which has separate aviation and distribution units, is Milkwood’s biggest investment, which it has owned since the fourth quarter of 2015 when it was trading at about 330 pence per share, Summerton said in a Jan. 18 telephone interview. The stock closed at 603 pence on Jan. 26.
"There’s probably 40 percent to 50 percent upside in Menzies," Summerton said. "Although it’s listed in the U.K., most of its profit is in U.S. dollars, so we would expect the value of the share to re-rate as those earnings come through and translate from dollars into pounds."
Read more: Hedge Funds Europe Brief
Summerton said he sees value being discovered this year through a combination of better operating performance from the company’s aviation business and management efforts to unlock value.
"We think that management will work at unlocking value by having a separate listing of the aviation business. This could be achieved by spinning off the distribution business," he said. "The benefit of the company is that it’s made up of really cheap parts. Even if you look at the businesses on a combined basis, it’s still incredibly cheap at only about 10 times forward earnings. Trade buyers generally pay between 15 to 18 times for these businesses."
Menzies didn’t immediately comm|
|Thanks 1GW. I didn't see that.|
|Peel Hunt nudged their target price up to 630p last week according to N&P.
|Subdued relative to the recent share price run. Now trading more than 10% ahead of the theoretical ex-rights price on my calcs and about 25% ahead of its post-rights low.|
|Fairly subdued? I would remind you that this is a world leading company on 10x earnings, with growth. If you have anything that comes close to it, I'd love to know.|
|No obvious "sell on the news" evident this morning, despite a fairly subdued update relative to the recent share price growth. It does sound like good news at Gatwick though, which makes a nice change.
|And I've just put another tranche through today, which should give me some capacity to buy back if there's any "sell on the news" with a January TU.|
|Just taken a bit of profit, selling about 1/4 of my holding. I'm looking forward to the next trading update, but they've bounced 20% in 2 months and are now well above the theoretical ex-rights price (on my calcs).|
|I am sure this was prepared for. More interestingly, Swissport staff seem to have been underpaid relative to Menzies...|
|This is the CMA announcement referred to in the Menzies rns this morning. It appears to give Menzies 1 week to come up with a "remedy" for Aberdeen airport to avoid a full investigation into the merger. I imagine the easiest remedy to offer would be a promise of the sale of the ASIG operations there to a third party - while possibly not maximising value given the conditions (i.e. a forced sale) that might be a small price to pay to get the acquisition through quickly.
|Thank you for posting that. I haven't seen those.|
|A couple of new broker ratings recently helping to maintain momentum I think:
5th Dec: Numis resumes with BUY & 650p target
2nd Dec: Berenberg initiates with BUY & 660p target
|The share price still hasn't really got back to where it was at the time of the rights issue. 615p pre-rights equates to about 543p I think as a theoretical ex-rights price.
Today's trading update is (marginally) encouraging, although I think they've put back the expected acquisition completion date from late 2016 to early 2017. I'm not sure Menzies ever gave the "late 2016" date but I remember seeing it somewhere - perhaps attributed to the seller. But in any case I think there's still scope for the share price to run purely to catch up with where it was before the market indigestion caused by the rights issue. And the longer sterling stays down at these levels, the more sustained the currency translation upside should be.|