Connect Share Discussion Threads

[cc2014] 20/10/2020 13:46

And in the nicest possible way did any of the panel hold shares in CNCT?

[davidosh] 20/10/2020 13:20

The panel were pretty positive about Connect at Mello Monday last night with three saying 'buy' and one 'loading up the truck'

[newshound1] 14/10/2020 11:23

Contract last time around was worth £213million

It wouldn’t have included the value of I newspaper at the time which is included in the latest contract

[fenners66] 14/10/2020 07:13

What was the last version of that contract worth?

[spooky] 13/10/2020 08:55

Another brick in place for the refinancing.

[this_is_me] 13/10/2020 07:58

An important contract renewal, hopefully at a good margin.

[babbler] 13/10/2020 07:56

Nice contract

[this_is_me] 12/10/2020 14:20

It first broke out of its trading range at the start of the month and has been going up since so it is not a sudden tip inspired jump.

[robow] 12/10/2020 08:37

tipped over the weekend?

[baracuda2] 07/10/2020 17:04

Hope you're right

[this_is_me] 07/10/2020 16:48

It looks like a proper breakout now. Possibly 30p by the end of the month.

[davidosh] 05/10/2020 16:46

profdoc...Would you like to introduce the company to the panel and of course the audience at the next BASH? There will be over 300 attending.

www.melloevents.com

[spooky] 05/10/2020 16:43

I see it slightly differently, they have broken out and then retraced to the breakout point. All fine, but everyone is waiting for the refinancing details which must be imminent.

[sphere25] 05/10/2020 16:02

Suspect this one will need a few Mello's and alot more! Even with the derisory rating, the interest isn't there to make it even slightly less derisory.

Will keep watching, but a few of these about which look interesting but the market isn't batting an eye lid on decent/good updates.

[profdoc] 01/10/2020 15:44

Excellent idea David

[davidosh] 01/10/2020 13:41

This would be an excellent company to run by the panel at the next MelloBASH on Monday 19th October so I will propose it as a candidate. www.melloevents.com

[sphere25] 01/10/2020 12:30

Looks cheap, even relative to historically low multiples. Clearly alot of doubt and bearishness baked into the price here.

Interesting chart currently showing a breakout but a very lumpy and illiquid one. Have been watching this one for a short term breakout play but it usually gets sold back down.

Will that statement change anything? Volume is light at the moment and not suggesting as such, but will be watching to see if bigger buyers come in. That could be the signal.

[schofi2] 01/10/2020 10:51

Adjusted EBITDA for FY2020 of GBP38.5m to GBP39.0m on a company valued at only 53m and net debt at FY2020 year end expected to be circa 2X EBITDA prior to the repayment of the Tuffnells working capital loan of 6.5m.

This has got to be one of the most undervalued companies around. It could nearly buy back itself with full year profits on this scale.

Re-evaluation due anytime soon but being a small company probably off the radar at the mo.

[profdoc] 01/10/2020 09:46

If a company can make over £20m after tax then, even if the income declines by £1m per year, it is still worth a multiple of the current market capitalisation.

Even better is the record of income from Smiths News - it has remained much the same for many years (courtesy of cost savings off-setting revenue declines of 3-5% per year).
Here is the operating profit history of Connect News:

2012: £39m
2013: £40m
2014: £42.9m
2015: £41.4m
2016: £40m
2017: £40.4m
2018: £35.9m
2019 (includes DMD income this time): £43.6m
The figures exclude the impact of the Pass My Parcel blunder.
The are after allocation of share of central overhead.
But they are before deduction of finance expense which amounted to about £6m - £7m per or tax (say £8m). Interest expense in the future is likely to be much lower than in the past when debt was £120m or more through the year (depending on the part of the month).

To be conservative, despite the evidence of stable operating profit in this division, I'll assume that both revenue and profit after tax will decline 4% year on year from this point forward – there might be an sharper fall in newspaper/magazine consumption in future.

I'll also assume that the after-tax profit for SN is expected to be about £2.5m lower in the year to August 2020, i.e. £26.2m - £2.5m = £23.7m.

The calculation of the present value of the profit generated by SN, assuming a required rate of return of 8% on a business of this risk, is:

(£23.7m x (1 – 0.04)/(0.08 + 0.04) = £190m or 77p per share.

This compares well with the MCap of £55m.

If the managers continue to find cost savings to offset volume declines such that the annual profit after tax stays at £23.7m, the valuation estimate is:

£23.7m/0.08 = £296m or 120p per share, 5 times the current share price.

Given the strong barriers to entry in this duopolistic industry, power over both publishers and retailers and high cash generation I'll stick with this company for a good while yet.

Revenue growth would be nice but it is not necessary for valuation purposes.

[hotdawg] 01/10/2020 08:21

They have been calling this a dying industry for years now and still it ticks over, ok you may never make a fortune I guess but you could pick worse

[gurjit] 01/10/2020 08:15

Except for being a potentially dying lone of business, should this not be worth at least 4x current price on fundamentals?? Am I missing something obvious?

[this_is_me] 01/10/2020 07:50

I was thinking of selling out yesterday since the share price drifted down in September. I'm glad that I didn't. A positive EBTA plus cash generation in the first quarter is an outstanding result.

[hotdawg] 01/10/2020 07:39

Sounds positive is these uncertain times, I hear a company rename is on the cards in the future ?

[gurjit] 01/10/2020 07:24

Wow! What's wrong with that update? ?

[postme] 30/9/2020 20:43

#NCYT #BMN #MTR #SMS #PAY #PRTC #SLP #APP #CNCT Ten ‘magic formula’ stocks for investors looking for value and quality -