Menzies(john) Share Discussion Threads

[grahamite2] 17/12/2014 08:44

Strange jump on no news.

[grahamite2] 17/12/2014 02:08

I have not yet done any research on this, but I can't find a thread for it - and there should be at least one for a stock which seems to be yielding 7.88%

[nw99] 05/12/2014 12:15

Could be in an uptrend shortly

[1gw] 05/12/2014 11:51

Nice chart this morning. Long may the trend continue...

[nw99] 28/11/2014 09:05

Large volume this am

[jbarker5555] 15/11/2014 21:45

Never trust a man stood too close to a sheep I say LG. Double bottom, I reckon he's talking out of his a*se! LOL :)

[1gw] 13/11/2014 16:25

That's a bit better (3.66 - 3.76). Hope this is sanity returning rather than DCB.

[lord gnome] 12/11/2014 10:29

Sanks is never serious jbarker. He prefers shagging sheep to his Shiela - he must be Welsh. He let me down badly with PFD. Promised me a low of 7p. I had cash ready and waiting and it never got lower than 29p. :-))

[jbarker5555] 11/11/2014 21:37

Double bottom at 70p? Are you serious? :)

[1gw] 07/11/2014 17:28

Don't you think that's a good 60% retracement just completed and now it's up past the £8 mark to a decent new high?

[sanks] 07/11/2014 17:04

Are these heading for that double bottom at 70p ish mark???

[1gw] 07/11/2014 14:56

Edit: perhaps unnecessary given the above couple of posts but anyway, since I'd already written it, I'll leave it here]

So on the aviation piece, in the first half of the year they have already delivered £13.3m of pre-exceptional op profit (vs £15.5m in 1H13). So your assumption of £18m aviation pre-exceptional op profit for the year means 2H dropping from £24.5m to £5m (or 22.5 to 5 if you put the corporate opex against aviation).

However, they will have "exceptional" costs again even without taking restructuring charges on aviation. In 1H14 there were £2.7m of contract amortisation costs in Aviation relating to contracts capitalised on acquisition of businesses (and £6m of costs overall for the Group between pre-exceptional and actual op profit).

For 1H:
pre-exceptional op profit for the group was £24m vs £26m in 1h13
op profit for the group (after JV and associates) was £18m vs £22m in 1H13
pre-tax profit was £14m vs £18m in 1H13
profit was £10m vs £13m in 1H13.

IMO, DYOR, E&OE

[ramridge] 07/11/2014 14:56

Thanks Simon.
The worst forecast is from N+1 Singer, eps for 2014 = 47.4
On current price this gives a PE of roughly 7.

So the brokers are less pessimistic than me. Great.

Anyway I made up my mind earlier and bought a reasonable holding @341

[simon gordon] 07/11/2014 14:41

Sharescope show the following forecast:

5/11/14 - N+1 Singer

2014
T/O - 1,855m
PBT - 43.1m
EPS - 47.4p
DPS - 27.8p

2015
T/O - 1,887m
PBT - 46.2m
EPS - 50.8p
DPS - 29.1p

Numis also have a forecast dated 5th November and their figures are:

2014
43.2m and 50.2p and 27.8p

2015
44m and 50.4p and 29.2p

Prior to the warning Shore Capital had them doing:

17/10/14

2014
48.5m and 57.5p

2015
50.5m and 61.2p

[ramridge] 07/11/2014 14:24

Hi 1gw -
Very useful note. Thank you.
As you say, there are a lot of moving parts and not enough information about the parts that matter.
I have made a few back of envelope calcs with what we know and made huge assumptions where necessary along the way. Here goes.

* starting with OP = 60m = 24m (Distribution) + 36m (Aviation)
* Distribution is said to be OK so assume a 5% growth = 25m
* Aviation is a dog. So assume a 50% drop in OP, giving 18m. Total OP becomes 43m
* Taking 2013 data from MorningStar, PTP becomes roughly 44/50 * 43 = 38m
* EPS becomes roughly 48.95/43 * 38 = 43
* Which gives a PE = 8

Doing the same calcs but assuming Aviation profits collapse to 0 gives PE of roughly 14.

So we come full circle and ask the crucial question, what does 'materially below Board expectations' mean.
If it means a 50% drop in Aviation profits then I am comfortable investing. The risk/ reward ratio looks good with a very decent dividend yld and good capital appreciation expectation. But if the Aviation profits collapse completely, then I will probably sit it out.

Please, please DOYR, and make your own judgement. I repeat the numbers are rough and ready and there are huge assumptions being made. The unk/unk could completely change the picture.

[1gw] 07/11/2014 12:56

ramridge - 2.4% is the 2013 full-year margin I think (45.4/1905.4).

Pre-exceptionals the split was:

1.9% Distribution (24.3m op prof / 1277.5m rev)
5.2% Aviation (37.8m op profit / 722.8m rev)

giving a total of $62m pre-exceptional op profit from the divisions with -$2m for corporate and so $60m headline "underlying" op profit. The difference in revenue between the 1905m and 2000=(1277+723) is down to JVs.

So according to the 5th Nov IMS, Distribution is "in line with our expectations" with sales values for both magazines and newspapers better than expected and cost reduction initiatives on track. So that sounds like good news for Distribution op profit in 2014. And Distribution is still by some way the largest revenue contributor.

On aviation, the question is how to interpret the "substantially reduced margins" at London Heathrow and the aviation outturn "materially below Board expectations". Given the relatively low proportion of revenue from the UK & Ireland overall in aviation, I would be surprised if the Heathrow situation is catastrophic for the Aviation profit. But they also have the Australian cargo return problems and I presume the ongoing currency headwinds that have been mentioned in previous statements.

Hope that helps! Re-reading it I'm not sure it will much. As usual, these statements never have as much detail as you need to work out what's really happening.

All IMO, DYOR, E&OE.

[1gw] 07/11/2014 12:16

1/2 million shares traded already so I don't think it's just MMs marking it up.

But common sense returning vs dead cat bounce? Common sense I hope.

[ramridge] 07/11/2014 12:03

Hi Guys -
I am interested in this share as a dividend play. Current div yld around 8% - 8.5%. But need to be reasonably assured of the b/s strength. So here is my take:

* net debt = 113m giving 1.2 x to net assets, and 2.3 x to 2013 operating profit (50m). Interest cover 7x.
* so looks ok. However op. margin is wafer thin = 2.4%. It wouldn't take much to dent OP, hence weaken b/s.
* finally TBV is negative

So as a dividend play, it is not a no, but not a yes either. Sitting on a fence is painful!

Views?

[pugugly] 07/11/2014 11:14

Low levels of Director purchases seems to have got some MM interest in marking up the share price However not that much cash on the line (more a token purchase) imo. If this was really good value at this price I would have expected a significanlty larger investment by the Directors.

Could one classify as a "DCB" with further to fall next week ??

[pugugly] 06/11/2014 17:22

1gw:- Thanks for your input - I need to do more digging on debt - Margins are so narrow even a few basis points off will have a horrendous result on the bottom line - Same the other way round.

Decisions Decisions !!

[simon gordon] 06/11/2014 16:38

Lot of historic chart support around 300p:

[1gw] 06/11/2014 16:31

callumross - its 2009 low was about 60p wasn't it? I missed that but managed to buy some at £1.16 and £1.56.

But look at the business in 2008 vs 2013. Between 2008 and 2013 the business has been transformed from one dominated by the distribution side, with all the challenges that faces, to one where aviation is the bigger profit contributor. In 2008 aviation had had a big hiccough, and again this year (2014) we have some issues. The question IMO is whether you think this is another hiccough on the way to a bigger and growing aviation business or whether you think for some reason this is the beginning of the end for the aviation business. Personally, I see no reason to doubt the longer-term future of the aviation business and longer-term believe Menzies should be valued as a growing business in a growing sector (aviation) with a distribution business tacked on and providing cashflow. In 2008, perhaps it was valued as a distribution business likely to go downhill fairly fast with an ongoing experiment in diversification into aviation.

Revenue
2008 £1166m Distribution, £501m Aviation
2013 £1277m Distribution, £723m Aviation

Operating Profit
2008 £22.7m Distribution, -£0.6m Aviation
2013 £21.2m Distribution, £26.3m Aviation

Net Cash from Operating Activities
2008 £19.3m
2013 £34.7m

Borrowings
2008 £59m current + £126m non-current
2013 £ 4m current + £138m non-current

All IMO, DYOR, E&OE.

[simon gordon] 06/11/2014 15:29

5/11/14:

[Dow Jones]--Panmure Gordon downgrades its recommendation on John Menzies (MNZS.LN) to sell from buy, and cuts its target price to 353p from 766p. Says trading in the company's aviation unit is significantly below its expectations. The brokerage also downgrades its fiscal 2014 and 2015 estimates by 10.5% and 19.4% respectively. Shares drop 25% to 366.75p.

[callumross] 06/11/2014 15:18

You should hit it no bother, hybrasil. Even now it is still over double it's 2009 £1.40 low.

[hybrasil] 06/11/2014 14:11

Now only 10 % from my target entry price