Menzies(john) Share Discussion Threads

[1gw] 12/5/2017 16:45

Only just squeaked home on disapplication of pre-emption rights.

[buffettjnr] 12/5/2017 12:43

No chance. They should have called an a and they didn't

[1gw] 12/5/2017 09:43

Really? The last I saw (early April - e.g. Telegraph article below) they (Gatemore Capital) were hoping either to find a white knight, or to renegotiate terms with Menzies. Have you heard that they've managed to reach agreement on revised (or even unchanged) terms?

“If a substantially better deal does not emerge, we believe the current one will be blocked, at which point shareholders will coalesce around changing the board,” Mr Meidar said.

[buffettjnr] 12/5/2017 09:26

Yes they stopped their opposition to the merger / takeover

[1gw] 12/5/2017 09:01

Nice upgrade in target price from Peel Hunt this morning - from 630p to 758p.

Good TU this morning as well. No mention of the disgruntled activist shareholder at DX - so it suggests Menzies think they can get this one over the line.

[1gw] 28/4/2017 10:17

Took a bit of profit this morning.

[1gw] 31/3/2017 11:30

I have to say this looks a really neat way of achieving the split.

Not only do they effectively spin the lower-rated part of the business (cf Goldman Sachs theory), but they do so in a way which does not require a new listing and achieves significant cost synergies into the bargain.

Only quibble would be whether ending up with an AIM listing for the distribution unit was the ideal outcome, but presumably they might move to a main market listing in due course.

[buffettjnr] 31/3/2017 07:33

Wait for 9

[1gw] 31/3/2017 07:15

Wow! All happening a bit faster than anticipated. Look forward to the open.

[1gw] 24/3/2017 11:08

Lakestreet taking some profit.

[buffettjnr] 21/3/2017 10:22

Wait for 8

[grahamite2] 21/3/2017 10:10

They say leave something for the next man - I'm beginning to think I left too much when I sold! Good luck chaps.

[1gw] 21/3/2017 09:57

Well we've just gone through the Peel Hunt 630p target.

That leaves:

650p Numis
700p Berenberg (target increased from 660p on 16th March)

[1gw] 08/3/2017 10:15

Pensions.

I thought this was an interesting line in the results:

"The Company has considered the accounting treatment under IFRIC 14 of the current deficit and the impact of the minimum funding requirement committed by the Company to 2025. A review of the Fund Rules has confirmed that the Group has an unconditional right to a refund of a projected future surplus at some point in the future."

I had assumed that any surplus arising should interest rates (and therefore discount rates) rise in future would be locked in to the pension fund. But it looks like there is a chance of getting the cash out again.

[1gw] 08/3/2017 09:47

Not much excitement in the market it would appear.

Peel Hunt reiterates its 630p target and "Add" rating.


As usual with full-year results I am left pondering the question: Are the shares "cheap" or "expensive" in multiple terms?

On an "adjusted" basis they look relatively cheap: About 12 times historic earnings.

On a statutory basis they look expensive: Nearly 50 times historic earnings.

And they have an appalling history of adjustments. If I take the last 5 years, then the difference between adjusted and statutory earnings, according to my records, has been:

2012 37.5p (68.8 underlying vs 31.3 statutory)
2013 15.5p (65.6 vs 50.1)
2014 26.5p (49.2 vs 22.7)
2015 26.2p (42.7 vs 16.5 [before restatement])
2016 36.0p (47.8 vs 11.8)

So although the specifics of the adjustments may be "one-offs", clearly the business has a history of significant adjustments. This year can presumably be expected to contain some chunky one-offs related to integration of the ASIG acquisition as well as the "usual" contract amortisation.

Still, I think my glass is half-full rather than half-empty this morning. Great to see aviation back to form, accounting for more than 50% of underlying operating profit. The outlook is good and there is a deadline of the Interim announcement in the calendar for an update on the Group "structure" review.

[buffettjnr] 07/3/2017 19:27

Yes - an update on ASIG integration would be appreciated.

[1gw] 07/3/2017 19:16

I'd completely missed that they've already announced (on 1st Feb) completion of the ASIG acquisition. So that's one thing less to worry about.

[buffettjnr] 06/3/2017 14:44

I'm with you entirely 1GW. And we need to see progress on unlocking value.

[1gw] 06/3/2017 14:30

And just bought the rest back now, again at close to the sale price. So nothing won (other than access to cash for a time for other ideas), but very little lost on that trade idea.

Now hoping that in Wednesday's results the upside from the translation of overseas earnings at the lower £ exchange rate will be greater than currently built into the price. Also perhaps some (positive) news on the progression of the acquisition.

[1gw] 02/3/2017 10:00

Bought some of them back just now at virtually the same price as my last sale. Doesn't look like a fall back to the ex-rights price is coming ahead of results and I'd like to have the bigger position for 8th March.

[buffettjnr] 02/2/2017 12:25

Perhaps the stronger cable most recently will provide an opportunity to add.

[1gw] 02/2/2017 12:19

That's a great write-up from Milkwood, thanks - good to see another bull in the camp.

I'm still hoping for a more significant pullback towards the initial theoretical ex-rights price (call it 540p-ish) ahead of results, in order to buy back my pre-TU sales, but maybe that ship has sailed...

[buffettjnr] 02/2/2017 10:37

Looking at Bloomberg this was released yesterday

Milkwood Capital Likes Menzies, Sees Up to 50% Upside

By Melissa Karsh

(Bloomberg) --
Milkwood Capital is bullish on John Menzies Plc, according to Rhys Summerton, founder and chief investment officer of the global equity long-short hedge fund.

The Scottish company, which has separate aviation and distribution units, is Milkwood’s biggest investment, which it has owned since the fourth quarter of 2015 when it was trading at about 330 pence per share, Summerton said in a Jan. 18 telephone interview. The stock closed at 603 pence on Jan. 26.

"There’s probably 40 percent to 50 percent upside in Menzies," Summerton said. "Although it’s listed in the U.K., most of its profit is in U.S. dollars, so we would expect the value of the share to re-rate as those earnings come through and translate from dollars into pounds."

Read more: Hedge Funds Europe Brief

Summerton said he sees value being discovered this year through a combination of better operating performance from the company’s aviation business and management efforts to unlock value.

"We think that management will work at unlocking value by having a separate listing of the aviation business. This could be achieved by spinning off the distribution business," he said. "The benefit of the company is that it’s made up of really cheap parts. Even if you look at the businesses on a combined basis, it’s still incredibly cheap at only about 10 times forward earnings. Trade buyers generally pay between 15 to 18 times for these businesses."

Menzies didn’t immediately comm