Menzies(john) Share Discussion Threads

[montynj] 28/11/2019 17:56

This stock is a takeover candidate. The most significant variable in all this is probably the price at which it will eventually take place. A solicited bid would come in at GBp 700, offering a 75% upside compared to the current share price. If an unsolicited bid was made, expect it to come in at not lower than GBp 600; and with an option to improve the offer if the company agrees to open its books to the bidder. If a bidding war was to break out between competing acquirers, all bets would be off which price we'd end up with. Of the four brokers that cover Menzies stock, Berenberg Bank set a target price of GBp 700, Numis Capital GBp 515, Peel Hunt GBp 748, and Shore Capital issued a buy rating, but I am not aware if they also set a target price. These brokerage firm estimates are primarily based on earnings and cash flow multiples rather than the M&A scenarios. Still, the overall trend shows that GBp 400 is widely seen as a share price that does not reflect the value of the underlying business. Closing this gap is where the opportunity lies. The developments of the past four months are further fuel for speculations that a bid for Menzies will turn out to be the catalyst for a revaluation of the stock. When will it happen? If Cerberus and Swissport have serious interest in growing their market share, they have probably just gotten a bit more nervous about potent ially losing out to each other or someone else. From my perspective, the potential bid scenario for Menzies is as solid as ever. The year-end period and the first quarter of a new year are always a particularly busy period for the M&A industry. Everything else is in the hands of what I deem to be an excellent executive team, one of whom placed a GBP 4.7m personal bet at a price of GBp 390. Go figure.

[buffettjnr] 28/11/2019 17:42

hahaha...ok cool...

[f15jcm] 28/11/2019 17:24

Marketscrener forecasts 2.9x EBITDA for year end, and they won't have adjusted for this morning's profits warning yet. Your prediction is ridiculous and could only be achieved via a rights issue.

[buffettjnr] 28/11/2019 16:42

Debt is a non-issue for Menzies as it’s a non-issue for MCD. Menzies will be net debt / EBITDA below 1 by Feb 2020.

[pottsypotts] 28/11/2019 16:19

Me thinks someone is short on these? each to their own as we all have our own views.Either the director is an absolute crackpot or his purchase of over 4.6 million quids worth of shares at £3.90 in September 2019 shows some faith in the company?

[f15jcm] 28/11/2019 16:09

I wonder if the lenders will be convinced by your argument. I've no knowledge of US equities but I'm willing to bet that McD's aren't popping rivets on their banking covenants.

[buffettjnr] 28/11/2019 16:03

The balance sheet doesn't reflect the true value of the business at all. Please tell me the tangible value on the balance sheet of McDonalds, Home Depot etc in the US? They are all hugely negative. It means zip.

contracts run for 3-5 years....they have renewed the ones that have come up for renewal...I don't know of any big losses.

FX is true. Market won't care about that...if sterling is strong.

Ofcourse, it will be taken over before the true value is reflected....

[nw99] 28/11/2019 15:09

Takeover target

[f15jcm] 28/11/2019 15:03

Will any of those things help with covenant tests?

Assets? MNZS has substantially -ve NTAV.

"with the majority of the substantial contracts due during the year renewed" some have clearly been lost.

The company has had an FX tailwind on overseas earnings this year. Likely to be a headwind in 2020.

[buffettjnr] 28/11/2019 14:39

How much of Kier’s revenue is from the UK?

What is the asset base of Kier compared to Menzies?

Has Kier’s management ever sold a business with low margins and 7x net debt / ebitda to private equity?

Has Kier been gaining or losing contracts?

Goodness me. I couldn’t think of a worse comparison.

[f15jcm] 28/11/2019 14:07

Yep, admittedly I timed my entry pretty awfully on 5th July but I've seen nothing since that makes me think this company is going to do well. Looks quite similar to what came before the crash at Kier: outsourcing, slim margins, very weak balance sheet, management pretending everything is fine. There was no mention of Thomas Cook exposure in the trading update, which I am almost certain will have stung them for some unpaid bills (unless the credit was insured).

It's a very strong market to be short of at the moment but fundamentals always catch up with charts.

[1gw] 28/11/2019 13:57

I must say I thought the TU was a bit "meh". So pleasantly surprised by the share price reaction. Market was perhaps fearing worse than just the mild note of caution.

[buffettjnr] 28/11/2019 13:24

Are you short f15jcm?

[f15jcm] 28/11/2019 12:27

The only thing that trading update told us for sure is that they are trading behind market expectations. Net debt/EBITDA was previously 2.8x, they haven't told us that ratio has improved (I suspect it hasn't).

[nw99] 28/11/2019 12:22

Good Progress In Second Half Of 2019 To Date

[nw99] 28/11/2019 09:38

Potential takeover target for private equity great company with huge potential

[nw99] 28/11/2019 08:42

Good update

[f15jcm] 28/11/2019 08:25

Very positive spin, though only 'broadly in line with expectations' i.e. down.

[cwa1] 28/11/2019 08:22

PS: Does anyone else miss the current news announcements in the header? Does thread owner grahamite2 still frequent here?

[cwa1] 28/11/2019 08:19

Yes, a bit numbers light, though the "story" has a positive spin.

Net debt continues to track as planned. We are also pleased to have concluded a legacy legal case that has resulted in an inflow of c£10m which will have a positive impact on our net debt position.

[f15jcm] 28/11/2019 08:11

Why no numbers? Doesn't even tell us if debt is up or down.

[buffettjnr] 28/11/2019 07:58

Operationally this has turned a corner. 2020 will be good. New contracts. This is great value at 410p

[buffettjnr] 28/11/2019 07:57

Chairman not CFO invested into Menzies

[montynj] 27/11/2019 09:31

Bullish looking chart. Sooner or later (and probably sooner), John Menzies will see a bid. It's not just other ground handlers that will have an eye on the Scottish company, but also the usual gamut of private equity companies. Ground handling is an industry ripe for a "roll-up". past transactions show that there is plenty of money to be made from combining smaller ground handling agents. Following a decade of consolidating smaller players, we are now about to see the final wave of mergers and acquisitions. In the end, we will see one or two industry giants that control the global ground handling market. the company has had a former Swissport (!) executive join its board as CFO. The new CFO invested a stunning GBP 4.7m of his money to buy Menzies shares at a price of GBp 390p. I wonder if a bid could be just around the corner

[1gw] 12/11/2019 20:45

Didn't realise you'd gone, you seemed so confident.