Royal Mail Share Discussion Threads

[lefrene] 05/6/2019 11:48

The conditions of it cost it vasts amounts of money, it would be of interest to see a revenue/mileage/manpower audit of all their delivery rounds.

[encarter] 05/6/2019 11:44

The USO guarantees Royal Mail a profit, it's worth the trouble.

[retsius] 05/6/2019 11:35

Stale shorts closing?
R.

[retsius] 05/6/2019 11:09

spob-:)

Are we seeing some action...…..?
Massively oversold imo

Wait till divvy date looms...great incentive to buy if in an ISA.

CEO privy to latest figures and he is not buying on a whim.
dyor
R.

[lefrene] 05/6/2019 11:08

It's the universal service obligation conditions, that kills RMG. Huge costs incurred for trivial deliveries/collections in remote and rural location. I've never even heard of them trying to play the 'green' card to reduce mileage to reduce pollution. Cut deliveries to remote locations to two a week, and you save on vehicles, mileage, staff and associated managers. RMG has over 40,000 vehicles, just losing 5000 of those would make a huge difference to the bottom line.

[spob] 05/6/2019 10:52

One thing I like about RMG is Neil Woodford doesn't hold any at the moment LOL

[fred splange] 05/6/2019 10:26

£300k

[careful] 05/6/2019 10:24

It is good to see the CEO buying another £100k of RMG shares.
He has a significant holding, always reassuring when the boss has skin in the game.

[crystball] 05/6/2019 10:17

Rico Back buys another large chunk of RMG shares.

[encarter] 05/6/2019 10:02

The USO is a safety net. The regulator is tasked with ensuring it continues and can change the rules to protect Royal Mail profits.

[mickinvest] 05/6/2019 09:54

Having a skim over the USO, they will bring forward the review if profits go below 5%
There is no other company who can offer a 6 day a week delivery to every property in the UK therefore this should underpin the shares at this level in my view.

[meijiman] 05/6/2019 09:53

Agree..he had a huge job sorting out the mess left by Greene..absurdly overrated IMO.

[encarter] 05/6/2019 09:49

If you study results, all the problems came in the first 6 months before Rico got a grip. Negative productivity first half. Second half was +2%. Actual profit first half was 5m, second half 170m. Plenty of one off costs also, 68m write down. 64m pension insurance, 101m back pay. 100m saving from divi cut. Also closing the DB pension scheme has massively cut costs.

[encarter] 05/6/2019 09:37

At least 92p in divis for a start.

[careful] 05/6/2019 09:34

Always the last desperate throw of the dice for beaten down shareholders.
They dream of some takeover at way above todays price.
It helps them sleep and rarely happens.

RMG have a potentially sound business and a strong balance sheet.
The management are doing everything they can to reduce costs.
The problem is that Moya Green settled an overgenerous deal will the unions that needs to be paid for.

Efforts are being made.
No one is that stupid, the whole team can see the share price.
A good risk punt at these levels tempting for any level headed contrarian.

All of those 'target prices'.
just look at the record of those clowns long term.
in the short term the share price is driven down,
..but todays share price is meaningless for serious investors.

What will the total return here be over 5 years?

[muffinhead] 05/6/2019 09:01

Liberum Capital 185p
Credit Suisse 183p
Jefferies International 170p
Deutsche Bank 150p

The most bearish currently checked into Roach Motel

[muffinhead] 05/6/2019 08:56

Market is never wrong

[creditcrunchies] 04/6/2019 19:49

once the unions do destroy the business the posties will all be on zero hours contracts or self-employed getting fixed rates per package just like the market norm for this business type. It's only a matter of time the union will just speed up the process to this point

[cascudi] 04/6/2019 19:41

and also institution and funds are buying

[cascudi] 04/6/2019 19:38

i found difficult to understand how rmg can be overvalued at this price.
according to this data

price / book = 0.43
ev / ebitda = 2.51
price / slaes = 0.19
p/e = 11.1
div yield (15p) = 7.
div cover 1.17 earning

[hermanngoring] 04/6/2019 16:19

Royal Mail shares are 'overvalued', says Deutsche Bank as it cuts target price
09:59 04 Jun 2019
The German bank said the structural decline in Royal Mail's addressed mail volumes will persist as volumes continue to shift to e-commerce channels
Royal Mail
Royal Mail's dividend yield looks expensive, according to Deutsche Bank's analysts
Royal Mail Group PLC (LON:RMG) shares are “overvalued221;, Deutsche Bank said as it repeated a ‘sell’ rating and cut its target price to 150p from 180p.

Deutsche Bank said Royal Mail’s shares may look like a ‘buy’ as the company expects a significant rebound in profits and cash flow as part of its five-year strategic plan.






READ: Royal Mail plans 40% dividend cut to pay for next stage of turnaround
“But in our view there are no easy short-/medium-term fixes for the Royal Mail as the business model is largely a fixed cost business, that is facing a material decline in letter volumes and has a unionised workforce,” the bank said.

Last month, Royal Mail posted a 30% drop in adjusted pre-tax profit to £398mln on revenue up 2% to £10.58bn for the year to the end of March.

The UK parcel and letters division, UKPIL, generated flat sales of £7.6bn as parcel revenue rose 7% on volumes up 8%, offset by letter revenue falling 6% as volumes declined 8%.

Dividend yield 'looks expensive' against nearest peers
Royal Mail raised its dividend by 4% to 25p per share but said it could cut the payout to 15p per share from 2019-20 to help pay for its new turnaround strategy.

Deutsche Bank noted that setting a 15p dividend for the next five years puts the stock on a circa 7% dividend yield, which in its analysts view looks expensive against the UK firm's nearest peers Bpost and PostNL, with arguably both those companies further down the line in terms of restructuring than Royal Mail.

Royal Mail’s new strategy is to broadly double operating profit over the next four years after it has fallen to a range of £300-340mln from £376mln in 2018-19.

Deutsche Bank expects Royal Mail to post an operating profit of £420mln for 2023-24, compared to the company’s implied guidance of £600mln.

Union pressures to hamper profits
The investment bank said Royal Mail’s discussions with the Communication Workers Union will start shortly and given that management expects a sharp increase in profitability, it may be hard for the company to push back on the union’s demands for improved pay and conditions for their members.

“When we look back over history at other European postal operators (e.g., Deutsche Post), we find that when a postal company is in restructuring mode, shareholders are typically not at the top of the stakeholder lists (e.g., Royal Mail dividend cut to 15p) as cash flows get diverted to the employees, complex restructuring/modernisation and M&A,” Deutsche Bank said.

“This has resulted in periods of material share price underperformance.221;

'Light-touch' regulations mean Royal Mail could raise prices
On the outlook for Royal Mail, Deutsche Bank said the structural decline in addressed mail volumes will persist as volumes continue to shift to e-commerce channels.

However, the bank believes Royal Mail has a “light-touch regulatory framework” with only 5% of revenues subject to direct price controls.

For this reason, Deutsche Bank thinks the decline in addressed letter volumes needs to be mitigated by stamp price increases, the ability to transform and significantly improve efficiency and growth from both the UK and European parcels businesses.

“But improving cash flow and profitability at the RMG is in our view hard as the business is largely a fixed cost business and unionised,” it added.

“We think that it is more difficult to modernise and take costs out of the business in an environment where GDP growth is weak and wage bill pressures persist due to low unemployment rates.”

In morning trading, Royal Mail shares were up 3.6% to 201.6p.

[andyj] 04/6/2019 14:38

Looking good until 1pm!