Connect Share Discussion Threads

[aleman] 26/10/2017 11:15

May or may not be relevant - UPS and Fedex announce increased US charges.

[aleman] 26/10/2017 10:51

I've topped up again. I don't see why they've fallen. They should be 140p+ and yielding 7% and could well go higher if they deliver on Pass my Parcel. I expect they'll be higher by the time they go ex-dividend in January.

[zimbtrader] 26/10/2017 10:23

Fenners any acquisition now would, surely, be a pretty stupid decision. Focus on sorting out all the other problems first before adding yet more workload involving integration / rationalisation.

Then again, some boards of Directors have done stupid things driven by ego!

The share price today suggests "relief" across the board. How it performs in the coming days and weeks will be revealing.

[fenners66] 26/10/2017 10:07

How much can they get for the books division?
Net assets as £15m and an operating profit of £2m

Would £25m be outrageous?

Drop borrowings to around £60m
Borrowing costs to fall from £7.5m to what £5m this year and less next?

Cost of dividend growth £0.9m could be funded from interest reduction

That assumes they don't come up with another expensive acquisition idea....

[aleman] 26/10/2017 10:04

These results really are not bad at all. They are just a mess of transitional charges. The key figure is adjusted EBITDA marginally reduced from £67.7m to £66.4m. This was not translated into good free cashflow due to a high tax charge and high capex. Normalised capex and tax might add £8-10m to cashflow. Then add to EBITDA the £15m of targetted efficiencies, £6.3m saving if pass my parcel hits breakeven, and £2m in saved interest and that could add £23m+ to EBITDA. Normalised free cashflow this year would be about £36-38m, so about £40m next year with interest savings and in 2019 could be much higher if targets are met. I can now see why they felt confident enough to increase the dividend. You won't find many other stocks with such a high targetted cashflow yield to market cap.

[lord gnome] 26/10/2017 09:55

Cheap and obviously high yield, but not enough here to tempt me back in yet. I can't see an obvious growth catalyst. It is a well run company, with debts and pensions under control, and there seems to be lots of cost savings to be made to support profits, but it just isn't going to grow. Pass my Parcel might yet be a winner, but the jury is still out. I can't see much downside from here, but I'll continue to wait.

[edmundshaw] 26/10/2017 09:29

Zim agree on the dividend. It needs support from a return to growth. But I am certainly not selling at 90p with underlying earnings of 15p+ and a currently sustainable yield of 10%. Pass My Parcel is effectively being run as a loss-making start-up within the business. Either it moves into profit and EPS shoots up or it will be sidelined or discontinued if it cannot be made profitable; either way that deadweight will inevitably be lifted at some point.

[zimbtrader] 26/10/2017 09:00

I still have nagging concerns. Like most others I feel a sense of relief but is that not a worrying sign in itself? The use of words like "tough" and "challenging" appear a little too often and I will take some time to fully research this as if it was the first time I was looking at the shares. I really doubt, on the evidence so far, that the dividend can continue to grow if business performance doesn't improve; drastically and quickly. What, realistically and in current market conditions, is there to suggest that may happen? The dividend may be covered but I would be worried if they continue trying to hike it without an underlying kick up in profit and further debt reduction.

Institutional reaction today will be interesting... my gut feel is to reduce my holdings and, possibly, even get out altogether.

[edmundshaw] 26/10/2017 08:45

Pass my parcel has started life as an expensive flop. It was a nice idea, but losing around £6m for one million units means a loss per unit of £6. I don't know how much of this loss is down to putting in/upgrading IT systems, but I still think a target of breakeven in 2 years is a stretch. I hope I am proved wrong.

Having said that, I expect losses there to reduce and the rest of the operation to do well. Moving management of the successful news business to improve the Tuffnells business looks like a good move (though I'd have expected they had already done this).

Whatever the current challenges, I expect things to improve, and the business is at a ridiculously low valuation, so easy to stay long here from a value argument alone.

[skinny] 26/10/2017 08:20

26 Oct finnCap Buy 99.00 154.00 154.00 Reiterates

[turbocharge] 26/10/2017 08:11

StockMarketWire.com

Connect Group's adjusted pre-tax profits fell to £48.0m in the year to the end of August - down from a restated £50.4m last time.

Revenues of £1,594.3m were down 3.1%.

On a statutory basis, pre-tax profits fell by 2.8% to £34.2m.

The group declared a dividend of 9.8p per share - up 3.2%.

Chief executive Mark Cashmore said: 'In what has been a challenging year, we have concurrently managed a period of tough trading while refocusing our strategy, restructuring our leadership, and disposing of the Education & Care division.

'A two-year transformation programme is underway, centred on a comprehensive integration of our core businesses, extending from leadership and central services through to the network and frontline delivery.

'We are now wholly focused on opportunities in Early Distribution and Mixed Freight - and we are moving at pace with a transformation programme, to deliver a combination of efficiencies, service and organic sales that will underpin growth.'

[speedsgh] 26/10/2017 08:08

My initial reaction to these results after the 40%+ share price fall since Jan: relief. Hopefully that sentiment can be sustained.

[morgank] 26/10/2017 08:07

FinCap reiterates buy , target 154p

[speedsgh] 26/10/2017 08:01

Seems like they are currently cutting costs to stand still. This is a business transformation story so higher risks (which are perhaps being more than reflected in the current share price), but attractive rewards if the strategy is successful. Maybe further consolidation/failures within the industry are required to make the sector more profitable?

"The integration is moving at pace. A single Executive Leadership Team is now in place across the combined business, and we are committed to delivering a two-year programme of scale efficiencies amounting to £15m over two years, in parallel with an upgraded and more agile capability. The previous divisional structures have been replaced with a single functional structure with centralised support functions such as Finance, Technology, Sales and Operations and we have introduced an integrated regional management structure, with responsibilities for these senior roles encompassing Tuffnells and Smiths News depots.

As a consequence of the integration, we have announced plans for a reduction of 340 roles (equivalent to 6% of the workforce) across the combined business in FY18; employee consultation is underway and a provision of £4.0m has been made for costs associated with the change programme."

[aleman] 26/10/2017 08:00

£15m of cost savings identified plus a hope Pass my Parcel will reach breakeven. Those two would add £21m for 2019.

[edmundshaw] 26/10/2017 07:58

My anything over 14-15p seems like it was a good mark. Adjusted EPS down a bit at 15.5p roughly as expected. I am content with that and the positive outlook statement.

[danieldruff2] 26/10/2017 07:55

Good statement, they're currently supporting a few business wings which need to scale up further to deliver decent profit, when these come through this will look very undervalued. Looking good as a 2-3 year bet I would say.

[speedsgh] 26/10/2017 07:54

Would have personally been happy to see them take a cautious approach & maintain the dividend at the current level until there is clear evidence that all the investment into Pass My Parcel is paying off...

"Final dividend of 6.7p up 3.1%, making a full year dividend of 9.8p, up 3.2%"

"The Board is proposing a final dividend of 6.7p, taking the full year dividend to 9.8p, an increase of 0.3p or 3.2% (FY16: 9.5p). The proposed final dividend for the year ended 31 August 2017 of 6.7p is subject to approval by shareholders at the Annual General Meeting on 23 January 2018 and has not been included as a liability in these accounts. The proposed dividend, if approved, will be paid on 9 February 2018 to shareholders on the register at close of business on 12 January 2018."

[nigelpm] 26/10/2017 07:53

Extraordinarily cheap with that fall in debt.

[speedsgh] 26/10/2017 07:51

Nice to see Net Debt fall substantially...

NET DEBT
31/8/13 £98.5m
28/2/14 £105.0m
31/8/14 £93.0m
28/2/15 £157.9m
31/8/15 £153.4m
29/2/16 £160.9m
31/8/16 £141.7m
28/2/17 £149.9m
31/8/17 £82.1m

[asagi] 26/10/2017 07:43

I agreed on both counts prokartace. I don't know how the market will react either and it does look very cheap.

"We expect a return to growth in FY18."

Asagi (long CNCT)

[prokartace] 26/10/2017 07:24

Well now we have it EPS 15.5p. Ridiculously undervalued and more savings in the pipeline. Sales of businesses to get the debt down. Dividend yield over 10%. Now I don't know how the market will react but on the surface the share price looks to be 50-60% too low.

[aleman] 25/10/2017 22:47

Consensus EPS is a little over 16p and a little over 17p for next year.

[edmundshaw] 25/10/2017 19:20

19.8p sounds a bit on the high side. But anything over 14 or 15p should see this rerate to a more sensible price, assuming the outlook is OK. Whatever, though the old alea certainly iacta est...

[grahamg8] 25/10/2017 17:11

According to yahoo the analyst consensus is revenue of £1.85bn (1.91) and eps 19.8p (19.5). Tomorrow we will find out how close the true figures are.