Smiths News Share Discussion Threads

[schofi2] 08/5/2024 18:37

Share price forecast: Investors Chronicle:
The 2 analysts offering 12 month price targets for Smiths News PLC have a median target of 80.00, with a high estimate of 95.00 and a low estimate of 65.00. The median estimate represents a 39.37% increase from the last price of 57.40.

[lord gnome] 08/5/2024 17:57

Clear blue sky now. How high can we go?

[this_is_me] 08/5/2024 14:49

I've had these on the back burner for a while. It looks like we are making serious money now.

[norbert colon] 08/5/2024 07:41

I understand that Onward Opportunities fund have recently added SNWS to their PF. I like ONWD's investment strategy which is akin to that of Rockwood who I admire.

[martin44] 07/5/2024 21:55

Totally agree we now have a very sound business that will continue to roll out ongoing profits and not only produce increasing dividends but also potentially special dividends and perhaps buy backs too…..I am for one very confident in the BOD and with JB at the helm few worries of any return to the past times……which are well behind us!

[norbert colon] 07/5/2024 13:21

Too much uncertainty! Are we talking about the same business...? Jon B was on the board at the time of prior acquisitions but previously iirc he was MD for the distribution business (what is now the current SNWS business) rather than being responsible for Group strategy and acquisitions and he's made it very clear over the last 2 years+ that they won't make an acquisitions unless they are sound. Fft has answered the point on debt already.

[fft] 07/5/2024 12:16

Makinbuks, have you looked at any of the past annual reports or listened to any of the previous imc calls ? I suspect not, otherwise you would know that the average monthly cash swing is about 30m (actually 28.7m in 2023). Not difficult to find out....

[makinbuks] 07/5/2024 12:00

I just think there's too much uncertainty for a sustained period of buying and share price reaction. I don't think they were clear enough at last weeks announcement. Areas where more clarity could have been provided:

Period end debt and average debt both roughly halved, but they didn't say what peak debt was. This along with the working capital deterioration just cause speculation.

If average debt fell to £12.5m, why did we arrange a new overdraft of £40m with an additional £10m accordion? They explained that CAPEX would increase by £2m per annum for the next two years but that's almost immaterial. So they must be thinking acquisitions. Again, this isn't necessarily a bad thing but it creates uncertainty. The company's track record in this is not good. Last year we saw an exceptional charge due to an aborted acquisition.

What final dividend do they intend to pay if they hit this years forecast? They hinted that the interim was normally a third of the total payout but why not simply be explicit?

I had been encouraged by the extended contracts to 2029 but now I'm asking myself what they have had to give to gain such longevity particularly on the payment terms. Obviously this is commercially sensitive but perhaps they could reassure somewhat with specifics

[outsizeclothes.com] 07/5/2024 09:49

A delayed reaction to last week's results, but income seekers just have to be looking at this.

[schofi2] 04/5/2024 23:41

Simply Wall St
Smiths News
SNWS
Share Price 7 Day 1 Year
0.56 6.1% 14.8%


Price target increased by 10% to UK£0.80
Up from UK£0.72, the current price target is an average from 2 analysts.
New target price is 43% above last closing price of UK£0.56.
Stock is up 15% over the past year.

[nicholasblake] 02/5/2024 19:20

Free cash flow is £25m and dividend will take about £12.5m, so £12.5m a year free for acquisition, special dividends or buy backs!

[schofi2] 02/5/2024 18:21

HOME NEWS SOUTH WEST
South West
Robust first half for Smiths News
Ben Butler
By Ben Butler
2 May 2024

Robust first half for Smiths News
Smiths News has reported robust first half trading
Swindon-headquartered newspaper and magazine wholesaler Smiths News has said its growth strategy continues to progress on the back of robust first half trading.

In the 26 weeks to 24 February 2024, Smiths News reported revenue of £539.8m, a fall of 1.9 per cent compared to £550.1m during the prior period.

Operating profit fell 7.8 per cent to £18.8m from £20.4m the previous year.

Jonathan Bunting, chief executive, said: "I am pleased to report solid performance across the first half of 2024. It has been another period of strong cash generation, scale cost savings, and further momentum on the contribution from our growth strategy.

The group also announced it has signed a refinancing agreement to replace its current senior finance agreement, which was due to mature on 31 August 2025.

The new refinancing agreement with two of the company's existing lending syndicate, Santander and HSBC comprises a £40m revolving credit facility, with an additional £10m uncommitted accordion facilit.

The facilities are available initially on a three-year term at an improved competitive margin of 2.45 per cent per annum over SONIA, which is a 155bps improvement from the previous agreement. The company has the option at each of the first and second anniversaries to extend maturity on the same financial terms, with lender consent, upon new three-year maturity periods.

The agreement removes the existing cap on dividends and distributions, which was previously capped at £10m per financial year. The removal of this restriction will enable the business to implement its revised capital allocation policy.

[schofi2] 02/5/2024 18:17

Smiths News said trading in the second half of the financial year would be boosted by England and Scotland’s upcoming participation in the men’s UEFA European Championships.

Jonathan Bunting, chief executive, said: "I am pleased to report solid performance across the first half of 2024. It has been another period of strong cash generation, scale cost savings, and further momentum on the contribution from our growth strategy.”

[schofi2] 02/5/2024 18:14

Well if they have reduced their bank net debt by 56% to £10m while average net debt has decreased by 53% to £12.5m, it looks quite possible that they will have paid off the remaining debt by year end. That leaves them with possibly around £20m extra a year to play with. Either to invest in bolt ons or pass on to long suffering shareholders. A 50/50 would be just abour right.
This is good going to say they had debts of around £75m three years ago.

Looking for some good movement here once the penny drops.

[deanowls] 02/5/2024 15:59

Costs will always be there it’s also how they manage them into the customer. They’ve consolidated a few contracts this year and whilst there is risk it is being managed well.

[santangello] 02/5/2024 15:22

Looks like lots of sell orders at 55p, be nice to see them clear off and move to the next resistance level.

[stevensupertrader] 02/5/2024 14:57

The key to every successful business is growth in revenue and increase margin .
In SNWS case is the opposite even with inflation running last year at say averaging 6% , SNWS cannot even maintain previously year revenue , let alone growth. SNWS is currently trying to reduce cost and reduce or eliminate debt which in a short run might gives result to pay higher dividend but in a longer time frame without growth in revenue , this would ends badly as cost will bound to catch up Ie increase due to inflation .

[marktime1231] 02/5/2024 13:20

That sounds right, the x 2 cover rule will restrict the final dividend to around 3p. It would be risky to overpay this year only to have to trim it again the next.

The backdrop of a 3-5% decline in business every year cannot be ignored, and the margins are slender to say the least. But the debt reduction and finance arrangements are positive. A 50-60p share price seems reasonable. So maybe I called this wrong when I took fright in the 30's.

[makinbuks] 02/5/2024 11:16

Thank you Edmond, good list. Can I add a concern? I expected a better FCF and in fact I had expected them to have cash on the BS by this point. On a fairly quick first read that is caused by an increase in working capital. That is counter intuitive when revenue is declining. OK, the outflow is roughly half the prior period, but they explain that by way of a "one off". It appears to me that they are caught in the middle between some very aggressive customers and suppliers.

I'm, of course, pleased with the dividend announcement and the comment that the interim is normally a third of the total. I take that as a hint that they expect a 3.5p final. But will a 5.25p payout be within the self imposed 2X limit? Seems a stretch with 4.6p in the first half.

Finally, they spent £3.3m cash buying shares for the ESOP. Wow! That's a huge number in comparison to the dividend to ALL shareholders of £6.7m. That merits a further look

[prokartace] 02/5/2024 09:53

Love the debt reduction. Should be debt free by 2nd half 2025

[edmundshaw] 02/5/2024 09:04

Positive:
1) Interest rate paid going forward now reduced from 9.2% to 7.65%, likely to fall slightly further later this year and then more next, and on an ever-decreasing debt.
2) Decline in sales seems to be slowing right down.
3) Further cautious add-on earnings.
4) Further management actions reducing costs.
5) Football sticker season coming up.
Negative:
1) Lower magazine waste prices.

I am happy with these results.

[davebowler] 02/5/2024 08:47

Canaccord....The current valuation is highly attractive, with a PER of 5.5x, a secure dividend yielding 10% and a FCF yield of 18%. We reiterate our BUY recommendation and increase our TP to 95p (from 85p), based on a cal'24E PER of c.9x, div. yield of c.6% and FCF yield of c.10%, implying 78% upside.

[bvc1cvb] 02/5/2024 08:44

Except that at least one of the 'sells' is a buy (mine!)

[lord gnome] 02/5/2024 08:41

Judging from the trades, it would appear that many had 55p set as a sell target. This is the three-year resistance level. We need to break through and close above it before we can make any real progress. I think Canaccord's target of 95p is a bit of a stretch but if we do break above 55 then the high 60s should be achievable.