Catalyst Media Share Discussion Threads

[zaitoon] 15/1/2007 14:29

Thats answered my question about the terms of the loan to buy the additional SIS shares. It seems there is little danger of losing the SIS stake due to onorous conditions of the loan by it being in default.

If this is the case then the shares look v attractive to me as well

[long by name long by] 15/1/2007 13:14

I have read your views with interest. Firstly, market reaction is not wrong on this occasion. The news can not be taken as positive. That said, I think this share is cheap. As far as I can see SIS is not doing badly, it is outperforming as far as I am aware, just looking at what SIS is doing in the market place.

CMX is not a share that has the potential to fall to zero, like many penny stocks, as CMX actually holds 22% of a decent asset, SIS.

Ignoring timing issues on the SIS dividend, which over the long run are neutral, my valuation of SIS is:

Yearly EBITDA - £30m (estimate only)
PE - anwhere from 10 - 20, but let's call it 15
Discount for minority 22% shareholding (say 20%)

This equates to a value of the 22% SIS holding as £79.2m. I think the debt in CMX is about £19.2m, so CMX should be valued at £60m. Current value is £10m!!

So what am I missing. Well, no one knows if SIS is at £30m EBITDA, could be less, could be more. The market also thinks that CMX could have cashflow issues if no dividend. But hold on, the loan to CMX runs to 2010, with it made clear that it will be paid out of dividend stream from SIS. So I am less worried about that.

Wow. Lack of clarity and uncertainty in this situation accounts for roughly an 85% discount to MV. This is a huge discount. Risk / reward ratio seems attractive. All IMHO, DYOR.

It says buy to me!

[bsg] 15/1/2007 12:13

Could it also suggest that the divi isn't as large as they expected, If it were to be a large divi then how would they spread it out over the next four years, and whats the point of spreading it out. If the divi is alot smaller, then move to a yearly divi to hide the fact the company is doing shyte !

[bsg] 15/1/2007 11:55

I think the 2M was a buy at mid price when 1.25 - 1.75, thats why it ticked back up.

[morgs] 15/1/2007 11:53

As soon as I post there is the 2.2m sale!

[morgs] 15/1/2007 11:52

I think this is oversold, but I can understand the view that the market views uncertanty with a negative short term aspect rather than taking a long term view. As a friend of mine once said 'the market will do what the market will do', doesn't mean it is right or wrong.

At a rough guess using 1.6 as the minmum buy that makes
1,016,706 bought to 750,000 sold. So I would say there are certainly some bullish trades out there, of course there could be a huge sale about to be reported!!!

[twix386] 15/1/2007 11:47

ProfesorSMSmith,

I read it that they previously expected a Divi in Q1 2007.. This was all in inverted commas, as history.

The new news is that a super Divi will not be paid as before and will be done on a different basis (yearly) in future. Still to be confirmed.

Agree it is not as bad as the share price reaction, but it does not say there may still be a Q1 payment on previously expected terms. There will not!

[bsg] 15/1/2007 10:29

When it was 1.5 - 1.75, buy @ 1.6 sell @ 1.53.

[mountpleasant] 15/1/2007 10:24

1.53p was last trade. Anyone know if this was a buy or a sell?

[professorsmsmith] 15/1/2007 10:15

I do not see the RNS as bad news at all. It doesn't preclude the possibility of a "supr dividend" it merely states that it is unlikely to be paid in Q1.

I for one would welcome the announcement of a coherent dividend policy from SIS. That would turn the CMX investment into an annuity and make it even easier to value.

Financing also becomes easier with certainty of dividend flows: very good news!

We "little" shareholdrs must keep our nerve and ensure that the jewel of SIS is not stolen from us at undervalue!

[morgs] 15/1/2007 09:24

ProfessorSMSmith

I like the "quantum and timing" comment appearing in your posting and happening to be the same terminology as the RNS!

Dissapointing reaction from the market, they seem to be treating it as bad news considering the effect of not aggregating multiple year dividends is a lower risk.

The trouble is that the biggest factor (and building) is uncertanty, time for some positive noises from the CMX board please, especially in respect of fincance and cash flows.

[theheadchef] 15/1/2007 08:41

No divi for the last 4 years? They'll use the cash to buy RP?
We still own 22%...as long as we can fund it(or not)at least this will now be sorted before the end of the 2007 season.
5p would be OK, 3p wouln't,6p would be great.
Is this value now??????

[agreeable] 15/1/2007 08:08

I now expect to see SIS offer to buy back stake from Catalyst. Catalyst offers no value to SIS and management of SIS are thought to be eager to find a way to get a stake in the business. Given the major shareholders in Catalyst it will not go on the cheap. I think bid at the 5 pence level in the next 3 months.
This announcement will make it harder for PD to finance an MBI, which is laos good news

[deep powder] 15/1/2007 07:19

well at least we have an answer this morning of sorts, not going to be pretty. Anybody have expertise in debt restructuring. Clearly SIS long term stable cashflow business is a positive, a negative is that CMX doesn't seem to hold much sway with its shareholding. JUst flog it and call it a day??

[mbaxter] 15/1/2007 07:18

Ahhh, all becoming much clearer...............

'CMG has been advised that it is no longer the intention of SIS to pay a dividend
in the first quarter of 2007 and that the future SIS dividend policy is more
likely to be that it will pay regular annual dividends consistent with annual
profits instead of significant four yearly payments. SIS's future dividend
policy is to be discussed by the Board of SIS over the next few months, as will
the timing and quantum of the next dividend.'

That accounts for the tooing and frooing and the price weakness.

'......As a result of this possible change in policy by the board of SIS, the directors of CMG will be discussing the implications of that possible change on its funding arrangements and a further announcement will be made as appropriate....'

However I am struggling to see why a move to annual dividends would be a major issue, provided they cough up for previous years.

[long by name long by] 14/1/2007 16:05

ProfessorSMSmith - what is your take on a potential acquisition of Racing Post by SIS. Also, asuming SIS has around £75m, what do you think happens to share price if they use all of that to finance the acquisition of SIS?

[theheadchef] 13/1/2007 11:49

Long by.....Thank you I understand now! LOL

[long by name long by] 13/1/2007 10:28

Deep powder - I understand you. If it helps theheadchef, people think that this share price is depressed because there is a real risk that SIS might buy the Racing Post. If they do, then there is obviously a risk that the dividend from SIS may not come through or be as large as hoped. So, once Racing Post sold then this falls away (assuming it is not SIS), and the share price then looks very cheap.

Morgs calculates it as a 57% discount to NAV surrounding this uncertainty.

[theheadchef] 13/1/2007 09:42

deep powder -- are you talking about the value of CMX? The RP will be sold,so i'm not sure where you are coming from LOL

[deep powder] 13/1/2007 09:03

Interesting piece in Guardian racing this morning. A buyer still not found for Racing Post but one of Britain's leading jumps owners is in the frame. Any of you that follow racing/business must assume it is Trevor Hemmings as it would tie in with his other leisure businesses?? Am I barking up the wrong tree?? If it is the case these shares are a bargain.

[deep powder] 12/1/2007 19:02

i reckon, decent uk small cap investment trusts still trade on 18% discount, racing post is the key for me, if sis not involved, ship it in..

[chrisdgb] 12/1/2007 10:05

i reckon £44m...

[professorsmsmith] 12/1/2007 10:02

I think this is quite straight forward. The information in the Public Domain is sufficient to make an educated assessment of the value of the Company.

SIS accounts filed at Companies House show an EBITDA number of approx. £25m for the year ended 31 March 2005. It would not be unreasonable to assume that there has been growth since 2005.

What is the business worth?

Given the nature of the business and its shareholder and customer profile one would have to allocate a high-end multiple to the EBITDA figure. Multiply that by 22% and see if it is bigger than £15m!

Clearly, an SIS dividend is relevant to CMG's enterprise value and you must make your own mind up about quantum and timing.

I agree that more information from CMG would be helpful; however, I dare say "new management" are on quite a steep learning curve.

[long by name long by] 11/1/2007 18:30

You make me laugh mountpleasant. I too atribute 80% of the value in this stock to birdstream. Are people missing something?