Menzies(john) Share Discussion Threads

[1gw] 03/7/2015 16:30

Took a few off the table late this afternoon. I was 99% invested so wanted a bit more cash in case of a bad reaction to the greferendum. Menzies was up to my 2nd biggest holding, over 10% of my portfolio and back in profit again so seemed like a good candidate for profit-taking. Still my 3rd biggest holding after the sale.

[1gw] 03/7/2015 14:28

To be fair, I think one of the question marks over Mnzs is how to interpret its "exceptionals".

In other words does a £5.14 share price represent a trailing p/e of 10 based on 2014 underlying earnings of 49p/share or a trailing p/e of 22 based on 2014 statutory earnings of 23p/share.

If I look back over the last 6 years (2009-2014), I estimate the underlying eps has on average been 18p/share higher than the statutory eps, with only one year (2011) where the two were similar and no years where the underlying was lower than the statutory [except that when restated in a subsequent year, the 2010 basic earnings then exceeded the underlying earnings].

Over that period the exceptional items have varied, but there usually seems to be a significant amount of something "exceptional" - contract amortisation, restructuring, impairment, onerous lease etc. So you might argue that while the individual items are "exceptional" the pattern actually looks like business as usual.

Errors excepted. Please do your own research.

[buffettjnr] 26/6/2015 17:09

Party is only getting started. I'm surprised this stock is trading at 700p. What else can you buy on 9x earnings which has a global business that can grow into long run?

[1gw] 26/6/2015 16:37

Low volume, but even so a close above £5 is a joy to behold...

[1gw] 19/6/2015 18:52

Well I would hope they might demerge the businesses (so that existing shareholders keep 100% of both businesses but as separately quoted entities) taking advantage of the current financing environment to put in place relatively "cheap" growth finance for the aviation side. That would allow the market to establish appropriate multiples for the two businesses and give the aviation business a bit more time to get back to its previous level of profitability before someone makes a move on it. I can't really see that a trade sale of the aviation business right now is going to maximise long-term value for shareholders. And I certainly wouldn't want menzies to agree a sale of the whole company leaving the buyer to split it up.

But the financing window won't stay open for ever and I wish they'd get a move on with it. It might be sub-optimal to demerge just as the airline side is going through a dip, but I would guess it's preferable to waiting until the airline side has fully recovered at the risk that financing is a lot more expensive by then. I'm hoping that they can talk confidently about the likelihood of a 2H bounce back in aviation when they produce the 1H results in August.

[buffettjnr] 19/6/2015 18:17

As long as we don't have to accept a take out at a low valuation...

[1gw] 19/6/2015 17:45

I certainly hope it's going at least that far. Having started selling in earnest in late 2012 and continued through most of 2013, I started buying again at £7.15 at the end of December 2013 and having bought on various occasions since then I now have an average purchase price of my current holding of about £5. So nearly back in profit again (on the capital) and hopeful of much more to come.

[buffettjnr] 19/6/2015 17:26

It's only getting started....700p is where it's going

[1gw] 19/6/2015 17:00

Well that's a nice finish to the week. A close at 490p which is above the close of 486.75p on 4/11/14, the day before the profit warning which took them down to a 350p close on 5/11/14.

[buffettjnr] 10/6/2015 11:16

Yeah and I think Private Equity interest. swissport IPo'ing this year. private equity selling out. Makes sense for them to do what they did with Swissport to MNZS. And a few others sniffing.

[1gw] 10/6/2015 10:49

Anyone still here?

Share price recovery seems to be motoring along, helped by yesterday's RNS which indicates the first step along the stated strategy to make better use of the distribution assets by seeking daytime use options.

[1gw] 15/5/2015 10:31

Compare the statement in this morning's TU ("evaluates all options, including its corporate structure on a regular basis") with the statement quoted below by the Times after the new CEO was appointed. Now by "on a regular basis" in this morning's TU I think they're probably referring to their recent creation of the CEO role, but given the context I'd say this is as good as we could have hoped for in terms of acknowledging the possibility of a split.

--------

1gw - 06 Sep 2014 - 10:20:31 - 464 of 510
Another popular bulletin board this one. Interesting choice of new CEO and a fairly clear statement that he's not supposed to split the business according to The Times:
"The chairman moved to quell speculation that his new chief executive would aim to demerge Menzies' two businesses, arguing that the print distribution business would stay because it is the cash generator that secures the group as a whole."

I would have thought that investors and banks would be more than happy to finance further growth in a standalone aviation business on the back of a good management team and a sound strategy. And the reward to shareholders from allowing the 2 businesses to be rated separately (in terms of growth prospects and therefore p/e) could be considerable.

Have to give him 12 months to get his feet under the table and deliver some results first I suppose.

[nw99] 15/5/2015 08:34

Oops I wish 407 ! Apologies

[cwa1] 15/5/2015 08:28

307 nw99??!! I need a new broker....

[nw99] 15/5/2015 08:10

No impact from Spain just picked another 5k at 307 and a bit

[buffettjnr] 15/5/2015 07:35

Great trading statement I would say...but then I am very long especially after yesterday's pullback! Interesting that new business is probably compensating for the disappointing Spanish miss.

[1gw] 15/5/2015 07:08

Yes, pretty good trading statement. 8% revenue growth in aviation (at constant currency). And at least they've acknowledged the split issue:

"In reference to recent public statements the Board remains committed to maximising shareholder value and evaluates all options, including its corporate structure on a regular basis. "

[nw99] 15/5/2015 07:05

We were disappointed to learn that we were unsuccessful in the Spanish tender awards. Whilst we are fully reviewing the situation we do not anticipate any material impact on underlying earnings.

[buffettjnr] 14/5/2015 22:14

Yes. Even a discount to Swissport's 13.5x EBITDA of say 30% would still value MNZS at £8/share.

[1gw] 14/5/2015 19:08

Thanks for the links Buffettjnr. I agree, the swissport disposal looks very interesting. Probably too big for Mnzs to think seriously about putting together the financing and the business case for a bid, but it should set some benchmarks for valuation of the aviation business and might trigger some consolidation in the industry.

[buffettjnr] 14/5/2015 17:35

I do however believe that this Swissport news is a far greater driver of performance.

[buffettjnr] 14/5/2015 17:33

hxxp://www.flightconsulting.com/aena-awarded-the-ramp-handling-licenses-for-its-43-airports/

Here we go.

[1gw] 14/5/2015 17:15

Perhaps they should have kept Craig Smyth around for a bit longer.

Do you have a link for the Spanish news, Buffetjnr?

[buffettjnr] 14/5/2015 16:48

No it's the outcome of the Spanish tenders where Menzies didn't get awarded any contracts. Tomorrow's AGM management better have a good story...or else they are history. The activists will be in command on this one.

[1gw] 14/5/2015 16:30

Positioning ahead of tomorrow's AGM and any further developments on the activist shareholder asking for a split of the busineses I would guess.