Reach Share Discussion Threads

[smicker] 20/12/2018 23:01

Thanks Philjeans

[philjeans] 20/12/2018 16:17

Christopher Williams, Deputy Business Editor
14 December 2018 • 2:52pm
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Reach, the publisher of the Mirror and Express, said it would marginally beat profit forecasts for the year after big brands such as Tesco boosted their advertising spending in newspapers.
Chief executive Simon Fox said as part of a fourth quarter trading update that Tesco and Amazon had increased investment in print advertising at the national level. Reach’s portfolio of local newspapers, such as The Manchester Evening News, continue to struggle, however.
Mr Fox said: “Regional print remains challenging but national print had a strong finish to the year. Tesco are definitely putting more money into print. It’s quite interesting to see online retailers like Amazon spending in print quite heavily at the moment.
“What I would like to think is that brands are seeing print advertising delivers a strong return for them.”
Despite the improvement Reach said its overall like-for-like revenue in the fourth quarter was down 5pc on last year. Print advertising across its national and regional newspapers is expected to come in 15pc lower.
Mr Fox has merged parts of the Mirror newsroom, such as the sports desk, with the Express and Star titles, acquired from Richard Desmond earlier this year in a deal worth £200m. Reach plans to strip out a total of £20m in annual costs by 2020. Advertising sales teams have also been combined in recent weeks.

Simon Fox, chief executive of Reach
News of stronger national advertising spending provided some relief to the downward pressure on Reach shares as investors view the changing media landscape with increasing concern. The stock rose nearly 12pc, although it remains down by nearly a quarter since the completion of the Express takeover in May.

Reach is attempting to rapidly transform its portfolio of scores of regional newspapers into a network of websites focused on big cities. In recent months it has attacked the Edinburgh and Leeds strongholds of JPI Media, the publisher that emerged from the collapse of Johnston Press last month. Mr Fox said he would target more new cities in 2019.
“We need to establish that a regional newsroom can operate and be profitable without the benefit of print,” he said.

Related Topics
Newspapers
Media and Telecoms industry





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[smicker] 20/12/2018 15:04

Even the jist of it would be fine Philjeans

[philjeans] 20/12/2018 14:46

Thanks smicker; very good article. Yes Tesco and Amazon spending much more on print advertising.

I can copy all the article here if you can't read it.

[smicker] 20/12/2018 14:07

Daily Telegraph 14th Dec. Headline just said Tesco but i'm sure it also mentioned Amazon.

Did anyone read the article? It was behind the paywall so i didnt get the detail

Edit.

"Amazon spending quite heavily"

[philjeans] 20/12/2018 13:02

Thanks Harry - I deliberately didn't mention the Pensions or Hacking issues as I believe, like you, they are largely sorted!

No volume - no rise.

Once we get a few buyers, this will rocket!

[harry_david] 20/12/2018 11:47

philjeans I agree everything you say.
I would add a couple of points, firstly there was no mention of hacking in the statement which is encouraging. Secondly it is likely the pension deficit will come down significantly, interest rates hopefully plus the decline in longevity to add to the extra contributions.
Circulations of the four national papers now over 1.3 mil are declining 12%pa which should mean continuing good profits for 5 years and reasonable life after.
Mailonline makes a profit with a workforce of 400. Reach has less than half this number. I know there is a crossover of reporters but even so the web business will be making a good profit contribution and with relatively fixed overheads it will grow

[smicker] 20/12/2018 11:47

Am i imagining it or did one of the papers report a significant rise in Tesco and Amazon advertising with the company. I cant find the link.

[philjeans] 20/12/2018 09:38

Re-rating nicely and miles to go.

This business is large, profitable and highly cash-generative.

It's on a P/E of 1.4 and earns a yield approaching 10%.

The chart has bottomed and turning upwards.

Debt is now minimal and falling rapidly.

The Express group merger has opportunities for major cost cutting through synergies and better working practices.

On line business is growing fast to partly counteract falling print sales.

All in all a stonking BUY for me.

DYOR

[gfrae] 20/12/2018 08:28

Cjohn, From memory they also had £250m of debt as opposed to about £50m now, and they had the hacking scandal which was about to put the NOW out of business, and many people suspected TNI of involvement.
We can agree to disagree.

[cjohn] 19/12/2018 18:17

Hi patience a virtue,

I am not running Reach. It's not my job. I'm not paid 6 figure sums to come up with a strategy.


I'm an investor. Investors are allowed to criticise; they are allowed to point out that there is a lack of strategic thinking; that being panglossian about digital is not a strategy. Even if they themselves, looking in from the outside do not have the answer.


Perhaps, if I was employed by RCH and spent my working life thinking about the situation and planning, I could come up with something. Perhaps, you could too. or perhaps not. It is a very difficult sector they are in.



The hype about digital has always seemed ridiculous to me. Private investors are allowed to be starrily hopeful. But management should be clear-sighted and not fool themselves. That's what they are paid for.

[cjohn] 19/12/2018 18:08

Hi gfrae, we're at cross purposes: share buybacks require an extra pension payment; as do extra dividends. Thee's no debating with the pension trustee and rightly so.

I'd agree on the buybacks - below 60p -; they have no other decent use for the cash - well, paying down debt.

Regarding them being cheaper on fundamentals now than when they were at 25p; no! They were then trading at less than 1 year's free cash flow; at less than tangible book,(( if you eliminated the accounting ítem of the deferred tax on a putative future sale of intangibles); at a PE of less than 1 etc etc etc The case then for buybacks was absolutely crystal clear. We're not quite that cheap yet.

[philjeans] 19/12/2018 17:33

gfrae - good points, well made.

Agreed.

Keep buying

[gfrae] 19/12/2018 13:51

Hi Cjohn, The pension fund will gain if shares are bought back as it will allow the company to retain more of it's earnings which could subsequently be used to give to the pension fund....if the pension fund are sceptical then perhaps there could be some agreement reassuring them. What is good for the company is good for the pension fund.
Secondly, I would argue that the current share price is much lower relative to it's fundamentals than it was when it was 25p.
Thirdly, without making things too complicated, it would immediately increase eps.
Fourth, if Reach were offered the opportunity to buy another newspaper company at less than two times earnings, with little debt, and generating substantial cash I think they would buy them....so why not buy their own shares ?

[patience a virtue] 19/12/2018 13:33

CJohn, appreciate your comments but do you have a clear strategy in mind that can be shared with the BOD?

[cjohn] 19/12/2018 13:12

Hi gfrae, unfortunately, they also have to make an extra pension payment, if they buy back shares. Still, at below 60p, there's justification for it, I'd agree.


The criticism of the buybacks that happened from me and others was justified. If you're going to do buybacks let them be at a CLEAR discount to intrinsic value. at the average price 100p, they certainly weren't. Plus we had the issue with the extra pension payments, dropping more of our precious cash into the pension hole to compensate.


Previously, I and others had urged the company - same FD - to buy back shares when they were around 25-35p. Hey, but why do it then, when you can do it later at 4 times the price?

They are not geniuses at capital allocation, to say the least. It's what gives me real pause here in spite of the cheapness of the shares. They don't seem to do strategy at all . All we hear is we are going to grow digital. Anyone who isn't mathematically challengedcan see that digital is way too small for this to anywhere near compensate for decline in the rest of the business.


All the best, CJohn

[philjeans] 19/12/2018 09:13

Ticking up daily and will get back to 80p support line before long.

Amazing value.

[gfrae] 19/12/2018 09:08

Surely it is time for Reach to start buying in it's own shares again !
I know they got a lot of unjustified criticism last time. It must make sense to buy in the shares on which they are paying a dividend of 10% (with a p/e of less than 2 ).
And, making lower total annual dividend payments is good for the pension fund too, despite the resultant higher debt levels it will bring the p/e ratio down even further.

[philjeans] 18/12/2018 08:57

14 December 2018
Reach plc (the 'Group')
Trading Update
The Board is confident that performance for 2018 will be marginally ahead of market expectations*.

* The market consensus range for adjusted PBT for the 52 weeks ended 30 December 2018 is GBP132.2 million to GBP133.9 million

So we can hope for say £135M PBT this year.

With a M/C currently £190M that's P/E of 1.4.

Debt down to £55M by 31/12 too!

Cheap as chips with enormous cash generation and chart now pointing decidedly North.

Adding.

[cityconindex] 17/12/2018 15:51

C John where are mirror reporters when you need one?

[cjohn] 17/12/2018 14:55

If the £5m sale figure was net of associated mortgage, then debt would go down. They'd have mentioned that if it was a significant sum. So that can't be the explanation, I don't think.

[landay] 16/12/2018 12:16

Property sale - could there have been mortgages on the two properties.

If only 5 million surplus, must have had a high value in fixed assets.

[cityconindex] 16/12/2018 11:51

Let's see £1.25 and hold and perhaps the directors ie top 2 buy a few 100k.

Still does not stack up 5 million for 2 major sites. Wonder if they accidently missed a zero after the 5? 😉🚔🛳✈ӽ74;🌞

[cjohn] 16/12/2018 10:17

190p is a market cap of around £566m, enterprise value - on half year figures, would be £943m.


I'm not going to say "fanciful": the marekts throw up all sorts of insane valuations. however, let's just say at that price, RCH would not be looking exceptional value.....

[philjeans] 14/12/2018 15:06

IN THE KNOW: No Longer "Fanciful" For Reach To Reach 190p Price Target

Peel Hunt said Friday its price target for newspaper publisher Reach no longer looks "fanciful" following the company's upgraded...