Premier Foods Share Discussion Threads

[shanklin] 18/2/2021 09:00

18BT

So, what might the interest on the £300m be, if PFD had a prime rating?

[shanklin] 18/2/2021 08:47

From just after 36 minutes in, CFO states "hefty premium" for currently redeeming 6.25% £300m debt. "Premium reduces by half" from circa mid-June, so "worth a look at" the debt market with that in mind.

[shanklin] 18/2/2021 08:04

Just re-listening to

[shanklin] 18/2/2021 08:00

And, in the latest conference call, PFD confirmed that from halfway throught 2021, the penalties for redeeming the 6.25% debt halves, so at that point they can sensibly look to replace this with a new facility... ...I think this was end 06/21 but will need to check. What would they now expect to pay?

[18bt] 18/2/2021 07:23

There goes another £30m of LIBOR +5% debt. Seems to be out of cashflows, so let's say that cash yielded LIBOR (unlikely), so the annual saving is £1.5m. They should pay off the remaining £20m in H1 2022 and then can make a start on the even more expensive £300m of 6.25%, but I'd expect them to be able to refinance all of that during 2021/22. A debt/EBITDA leverage of under 2x should enable that, but I suspect the ratings agencies will want to see the March audited accounts before raising the credit rating - S&P seem to have it as a +ve outlook. It really should be a better rating than that - feels like a BBB. Moodys at B1 - surely should be Baa3. It now feels well into Prime rating territory.

[shaker44] 29/1/2021 12:42

I got out after holding at a loss for many years simply because I don't thinks its the best game in town. The pension issue will get smaller but is still a drag and not much likelihood of strong growth imo. Probably safe but steady as she goes

[shanklin] 29/1/2021 11:30

And restaurants in lockdown until at least May is not going to do PFD any harm, albeit I suspect the sales benefits of Covid are largely being offset by additional costs. So really its all about the sustained deleveraging process.

[qs99] 28/1/2021 08:50

Yup all helps. Still can't see/understand why people are still selling into a de-leveraging flip of value into equity play? With yield? DYOR

[18bt] 26/1/2021 07:06

And an NED purchase of c£10k

[qs99] 25/1/2021 14:57

Seller cleared it would seem...DYOR

[qs99] 25/1/2021 10:29

thanks Gecko

price reaction looks really odd IMO as it continues to deliver, de-leverage and gain market share, with launch of international sales happening......DYOR but I think a yield will be in play this year, will be happy to continue to add to my ISA below £1.10.....

Cheers
QS99

[geckotheglorious] 22/1/2021 21:18

Ali4
post 20239

erm..............

"Jefferies analyst Martin Deboo said: “Premier is clearly enjoying a good war. However, this is more than just a bubble economy. Today's quarterly sales growth figure was significantly ahead of Deboo's 5.2% estimate"

CLUE 1!!!!


"Peel Hunt recently named Premier as one of its 31 value stocks for 2021
Analyst Charles Hall added: “The renewed lockdown is likely to extend the positive performance in the short-term, but we see potential for some of the themes to be longer lasting, with more people working from home, an increase in cooking from scratch, greater online penetration and a strong base for growing international.”;"

Clue 2

I am linking an article that summarises broker reports!!!

[ali47fish] 22/1/2021 18:56

gecko - is your post above a broker report or your own commentary please?

[qs99] 22/1/2021 09:00

Have bought a few parcels more ....IMO the share restructuring will allow divis, the 6% coupon debt refi later this year, plus ongoing (hopefully!) upgrades will allow net debt ratio to continue falling materially, allowing the re-start of dividends.....the US international roll out is also fascinating if they can get that right that could also be material....

DYOR, but in this for yield and capital growth in 2021

[qs99] 22/1/2021 08:26

Looks way oversold IMO...should be a yield also coming this year IMO....I reckon H2....DYOR

[geckotheglorious] 19/1/2021 16:29

"Well done to all the long term holders still here"



One of the best-performing stocks of the pandemic revealed more “exceptional” progress today as households continue to turn to Premier Foods (LSE:PFD) brands including Bisto and Sharwood's.

The home cooking trends caused by recent lockdowns, and the ongoing closure of pubs and restaurants, have created the perfect environment for Premier. That’s led to further City profit upgrades after the company said sales grew 9% in the quarter to Boxing Day.

Once trading conditions start to normalise, the pandemic's impact should still be felt, however, as stronger cash flows have enabled Premier to retire expensive debt and boost investment, including a plan revealed today for selling Mr Kipling cakes in the United States.

And with more people expected to continue working from home, the longer-term demand outlook for Premier's wide-ranging portfolio remains promising.

Jefferies analyst Martin Deboo said: “Premier is clearly enjoying a good war. However, this is more than just a bubble economy.

Today's quarterly sales growth figure was significantly ahead of Deboo's 5.2% estimate, driven by momentum in UK groceries and a better-than-expected result in the branded cakes division. Trading profits are now expected to be between £145 million and £150 million in the year to March, compared with Deboo's initial forecast of £144.8 million.

He added: “Sustained improvement in household penetration, market share and brand investment, which is collectively delivering both growth and debt reduction, is laying the foundations of a better and more conventionally-financed Premier Foods.”

Premier shares recently broke above the 100p level, having languished in a zombie-like state below 50p for the period between 2016 and 2019 due to high levels of indebtedness. The share price rose 165% in 2020 and is currently up 390% since the market low in March.

Underneath that balance sheet millstone, however, analysts believed a strong business was seeking to show its true value. That's been unlocked by chief executive Alex Whitehouse, although he owes some of the recent success to initiatives prior to his appointment in August 2019, such as the rebranding of the Mr Kipling cakes business.

Just as important as the trading improvement has been a landmark agreement with trustees for the merger of three pension funds, resulting in a substantially improved funding situation.

Profit-taking by investors today saw shares fall back 4.4p to 103.6p, even though Whitehouse said the third quarter had been “another period of exceptional growth”.

He added: “Looking to the remainder of the (financial) year, out of home eating is likely to remain heavily restricted and we therefore expect to see continued high levels of consumer demand for our products.”


Peel Hunt recently named Premier as one of its 31 value stocks for 2021, even though it rose by 165% in the previous year. The broker today increased its price target by 5p to 130p and also upgraded its 2021 profits estimate by 5% to £105 million.

Analyst Charles Hall added: “The renewed lockdown is likely to extend the positive performance in the short-term, but we see potential for some of the themes to be longer lasting, with more people working from home, an increase in cooking from scratch, greater online penetration and a strong base for growing international.”;

[shanklin] 19/1/2021 15:56

Obviously the debt on the 5%+LIBOR floating note will be down to £50m shortly, and there looks to be every possibility that it will be paid off by circa by the middle of 2021.

The Q&A on



threw up one interesting point on the potential for re-financing their other debt note, the October 2023 £300m fixed rate note which has a coupon of 6.25%.

The CFO stated that with their debt much reduced this now looks a full rate, a point which has been made on previous calls. He pointed out that there is a penalty for redeeming the note early but this penalty halves from the middle of 2021. So, from that time, they will be looking to refinance the debt.

I have no idea of the associtaed penalty or of what interest rate they might expect to achieve given the ongoing drop in net debt/EBITDA.

Thoughts welcome.

[shanklin] 19/1/2021 13:47

EC,

Will be interested in what you make of PFD.

Some bizarre reactions to strong RNSes currently IMHO.

Obviously PFD have benefited from COVID but a lot of what is going on is due to self-help. And paying down 5%+LIBOR debt will make a big difference.

Shame about the pension situation but hopefully they will get completely on top of that soon.

[effortless cool] 19/1/2021 13:32

Trading update looked very positive to me. I am surprised by the market's reaction and have taken the opportunity to enter with a sizeable purchase. Now I need to follow up with some analysis .... hope I'm not too late to the party.

[qs99] 19/1/2021 12:53

Think as the debt comes down, private equity may take a look at this IMO if it becomes too lowly rated.....divi would be a nice reinstatement in 2021....let's see.....COviD has helped them, but perhaps new habits have been borne out of it that will benefit PFD in the long-term?

[lammylover] 19/1/2021 10:00

Excellent Q3 update, but muted market response.
I've sold my holding at 105.2p - want to lock in profits and will buy back as it looks like we are being driven back below 100p by profit taking and short sellers starting back up.

[qs99] 19/1/2021 07:19

Cracking update IMO....debt really coming down fast DYOR

[thirty fifty twenty] 12/1/2021 16:36

Hi Dan

i agree and have being doing similar.
of course they are known for the Mr K,
but it is the sauces for home cooking that are also a big driver of sales.

i think as far as the equity is worth,
the small increase in sales (on a fixed production base)
gives a big boost to profits,
which means debt falls off even faster,
which significantly -de-risks the business,
which i think will allow the equity to have a higher rating on higher profits giving a double whammy boost.

All IMHO, DYOR + BoL
PFD is in my top5 hldgs

[danvestment] 12/1/2021 14:30

Having spent a lot of time today going through the figures again I have just added more (irrespective of previous after news drops - which I managed to take advantage of - oops sorry).

Anyway - my overall reason to buy again, standing back from the figures (which are good) is a bit more Eddie Murphy analysis from the film Trading Places - We have been/will be stuck in an effective stay at home scenario (including the annual Christmas boost) from November 2nd 2020 to April 2nd 2021 - that's 6 months !!!!!

How many Mr Kipling cakes are going to be eaten in that time etc. etc. - A hell of a lot.

Good luck