Phoenix Share Discussion Threads

[hyden] 01/3/2018 10:55

EdmundShaw, I have approached matters a slightly different way. We are both in the same ball park so I am comfortable we are both right.

Current market cap = £3,095m
Rights Issue = £950m
SLA to own ~20% of the enlarged Group
Future dividends expected to be 338m pa.

So, (3,095 + 950) / 0.8 = £5,056m = enlarged market cap
338 / 5,056 = 6.68% = revised dividend yield.

The actual dividend per share will dependant upon the number of shares to be issued. I calculate that your figures are consistent with a 1 for 3 rights issue which seems sensible at this stage.

Current shares in issue = 393.24m
Rights Issue (@1 for 3) = 131.08

(393.24 + 131.08) / 0.8 = 655.4m shares in issue following Rights Issue and the 20% issued to SLA.

so, 338 / 655.4 = 51.57p per share dividend.

By my calculations Numis have assumed the Rights Issue will be ~ 1 for 2, implying a Rights Issue price of around 485p, and which arrives at a dividend of ~45.8p per share.

[my retirement fund] 28/2/2018 23:34

The level of journalism and input from those in the Investors Chronicle team is often quite atrocious really. I wonder how much some of them get paid ? What ever calibre working for them, it's bloody anoying when you consider a copy of this magazine if around 4.50 a week and many articles are not fit to use as toilet paper.

[edmundshaw] 28/2/2018 19:15

IC numbers are utter nonsense. It is quite dreadful really. They arrive at a 5.8% yield after going round the houses based on various adjustments for the rights issue.

But it is much simpler than that. A 3% upgrade in dividend of 50.2p is about 51.7p. At 788p that equates to a yield of 6.56% by elementary arithmetic. We don't need to do the adjustments for the rights, the company did that for us.

[speedsgh] 28/2/2018 16:51

New tip update in Investors Chronicle. Misleading title to article imo...

Phoenix to deliver bumper payday -

IC VIEW
The purchase price represents 84 per cent of Phoenix’s Solvency II own funds, less than that paid for its acquisitions of AXA Wealth and Abbey Life at 85 per cent and 89 per cent, respectively. Analysts at Numis forecast a dividend of 44.5p and 45.9p a share in 2018 and 2019, respectively (equivalent to a 3 per cent upgrade adjusting for the rights issue), after adjusting for the rights issue. At 788p, that represents a potential yield of 5.8 per cent in 2019. Buy.

[hvs] 28/2/2018 11:19

Best to fink again then aint it ?

[finkwot] 28/2/2018 11:14

Perhaps I'm being dim but I don't understand what is meant by this:

"Based on last night’s share price this is the equivalent to a 3% increase in dividend per share."

Does he mean 3 percentage points, ie to over 9%? If not, why cite the share price?

"In this case we’re increasing the dividend from £197m to £338m, as I said, an equivalent of 3%"

Also, since the terms of the rights issue haven't been published yet, how can he know the level of dividend per share?

[hvs] 28/2/2018 09:29

Enjoy. U Idiots.

[hvs] 28/2/2018 08:32

Sit back and enjoy.

[schofip] 27/2/2018 13:38

Some people simply cannot refuse to take a nice healthy profit and sit back,?

[edmundshaw] 27/2/2018 13:26

There will always be some investors reducing their holding in anticipation of taking up rights, in order to keep a similar weighting in the portfolio. I suspet the 7% gain on the news just provided quite a good opportunity for them.

[pj fozzie] 27/2/2018 11:52

I'll join in thanking you Yupa - a good link and further reinforces my positive mood towards Phoenix. I'm very happy to take up the rights issue and continue to build up my holding.

Slightly surprised that the share price is easing off a bit. The more I internalise the news, the more positive I feel. I was expecting a slow drift upwards after the Friday jump.

Cheers,
PJ

[hvs] 27/2/2018 09:05

I agree thank you yupa.

No worries here.

[jonwig] 27/2/2018 05:37

@ yupa - highly recommended viewing! He's very good.

[yupawiese2010] 26/2/2018 20:38

C.E.O Clive Bannister talking on Bloomberg tv this morning.

[edmundshaw] 25/2/2018 15:19

Another calculation: Looking at the presentation, I estimate that an unchanged dividend is now affordable for at least 15 years without a new acquisition (up from 10 before, and making a bit of an assumption on the cash generation profile which was not disclosed). But something tells me that Phoenix will beat the cashflows expectations and will not be shy about making further value-accretive acquisitions.

[edmundshaw] 25/2/2018 14:55

BTW, transcript of the director spiel is a good read, can be found here:

www.thephoenixgroup.com/~/media/Files/P/Phoenix-Group-v3/Attachments/proposed-acquisition-of-SLA-disclaimer/transcript-proposed-acquisition-of-standard-life-assurance.pdf

[edmundshaw] 25/2/2018 14:49

The 3% uplift in the dividend seems to me a bit conservative. And the cash and debt raise seems several hundred million in excess of what is required.

Given Phoenix also says that in the event of a no-go they plan to utilise the cash for other acquisitions, I suspect the added firepower has already a target or two in the cross-hairs. I should not be surprised to see another acquisition or two in the next twelve months!

Edit: to be clear, I am rather expecting another acquisition NOT including the annuity book where Phoenix is currently already in exclusive discussions for an external pension buy-in transaction.

[jonwig] 25/2/2018 14:41

It's win-win, I think....

PHNX gets improved dividend and cashflow potential, and once integrated there will be a lot of capital release. SLA gets to manage the assets of PHNX and 20% of the enlarged PHNX.

As already pointed out, if you take up your rights in full, you'll have the same stake in the enlarged company. If you want to sell some or all of your rights in nil-paid form, you won't lose money.

A long time ago I did a spreadsheet on a company comparing the actual nil-paid price with the theoretical. It was a waste of time, but might be worth following on day one.

@ pj fozzie - an alternative is to sell some nil-paid to afford to pay for the rest. That's what I'll have to do to since I'm going to change ISA provider.

[pj fozzie] 25/2/2018 13:58

I'm just pleased that it's looking like the timing will be in the new tax year - I don't have enough left in my allowance for my SIPP or my ISA to cover it before the 6th April.

Altogether (as a shareholder of both PHNX and SLA) I'm very happy with how this is panning out. Seems to be better for PHNX than SLA - but since I have over three times as much in PHNX, that's fine by me.

Agree that the split is of no importance - it's all gonna cost the same.

Cheers,
PJ

[edmundshaw] 25/2/2018 13:52

Really, the split is of no importance. They are raising cash and you get to keep your proportion of the company (after the 20% issue to Aberdeen) if you take up your rights, you get diluted by the same amount if you do not (but with more assets per share). 1 for 1, 1 for 3, 13 for 29, it makes no difference as the issue price will adjust accordingly.

[garycook] 25/2/2018 12:24

jonwig,A 1 for 1 sounds fantastic to double your Share holding in PHNX.I cannot see that happening to good to be true surely ! Yes Ianood 1 for 3.

[jonwig] 25/2/2018 10:39

topvest - they want to raise £950m and have 393.23m shares in issue. That means 242p/sh. It couldn't be any other number.

Whether there's dilution, I doubt it, as cashflows and dividends will increase. And NAV/sh isn't particularly important for life assurance.