Smiths News Share Discussion Threads

[norbert colon] 10/8/2022 22:52

Yes I'm also continuing to hold as it's a stable business with great cash flows and some new initiatives to increase profits and offset top line decline. Yield very attractive and possible bid target (aren't they all) !

[martin44] 10/8/2022 21:51

Same here well over weight but the yield is too good to be out of this one!! Can only be time till we see take off!!

[edmundshaw] 08/8/2022 21:57

I would add if I wasn't already overweight... Just a waiting game for me now...

[aishah] 08/8/2022 19:25

Yield of over 12%, pe 3.3, well beaten down. I'll look to add more soon.

[lord gnome] 08/8/2022 19:22

No idea, it’s very disappointing. Nothing changed on the trading front, but liquidity in small caps is non-existent so even light selling will see the shares marked down. I wouldn’t mind a few more, the yield is stratospheric, but I will wait until I think it has bottomed out. 30p should do it. Sooner or later it will be snapped up as a cash cow. Once the full yield is announced I think we will see a change of direction.

[1knocker] 08/8/2022 19:17

What is going on here? Anyone any ideas? Quite a slide.

[norbert colon] 16/7/2022 09:27

Good point - I'm not expecting anything to have changed anyway. Just pleased to be holding them.

[hillock1] 16/7/2022 08:17

Hi Norbert,

I think, to some extend, they had issued a trading update on 30 May 2021, and I quote

"Beyond the impact of the McColl's administration, underlying trading continues to be in line with expectations and, given the Company's on-going cash generation and strong net debt reduction, the Board continues to expect to be in a position to recommend a final dividend for FY2022 up to the full distribution permissible under the Company's current banking facilities (£10m per financial year), for payment in February 2023."

£3.4m to £4.5m hit to bottom line this financial year, in-line underlying trading and hopefully the dividend could up to £10m for the full year.

But yes, it would be nice to see a new update in coming days.

[norbert colon] 14/7/2022 06:50

Hoping to see a trading update over the next few days based on last two years

[rightnellie] 13/7/2022 15:24

Received the dividend last week - a decent yield at current share price

[1knocker] 07/6/2022 16:28

Warehousing and delivery are pretty good fields to be operating in at present. they just hv to be careful not to sacrifice margin for volume.

[baracuda2] 07/6/2022 11:39

Some reasonable traded today

[norbert colon] 06/6/2022 21:48

Think you'll find it's all leasehold and they lease around 1m sq/ft (based on £6m of lease payment annually at say £6.5 sq/ft on average. Happy to be corrected on this. Subletting this portfolio of warehouses as they are now doing (assumed not all yet) is clearly going to bring in some cash.

[hillock1] 06/6/2022 21:18

hi ftt and fenners66,

Do you have any idea what's the size/ market value of the company's warehouse portfolio? The company did comment on having 36 warehouses of different sizes and only open from midnight to breakfast time.

The only number I could find is GBP 8.3 million of Property, Plant and equipment, but no further breakdown, and I am guessing the number is not marked to market value. 

I try to google and only locate ~10 warehouse sites through Google Map. 
I am just trying to look more "up to date" asset value, maybe it's somewhat relevant for a company facing declining revenue, for better margin of safety 
Thanks 

[fenners66] 06/6/2022 10:16

Just looked at that half year turnover , I had previously thought they had the distribution contracts as just the transport element rather than purchasing the newspapers and magazines and then selling them on to retailers , then them selling them on to consumers...

So I have found a quick stat

"expenditure on newspapers fell from 4.45 billion British pounds in 2005 to under 2.8 billion GBP in 2020. National newspaper circulation in the UK has been declining for years and fell below one million copies in 2020 even among leading brands like The Daily Mail. The circulation of leading regional daily newspapers also dropped year-on-year, and in the first half of 2021 only one such publication reported a circulation of over 30 thousand. "

Take out regional newspapers , magazines and the contract at Menzies , divide £1bn by 365 days and retailer margin and you may be correct , that there is a huge % of variable cost to take account of in that margin calc,

[fft] 06/6/2022 01:27

Hi fenners. Good point, but I don't think it is completely right. SNWS revenue is about 1bn. That must include revenue from the sale of papers/magazines etc. Returns are accepted. Costs (of nearly 1bn) must then include the cost of buying the magazines/papers from the publishers as well as the fixed items like warehouse/delivery/etc.I also haven't looked at the numbers but if we, for arguments sake, assumed fixed costs (warehouse/delivery/head office) were 100m a year then 900m would be variable costs buying the papers/magazines. The actual loss on losing 5% of revenue would be about 10% of the margin on the papers. So, more than 5%, but less than 100% :-). Think that's right....I feel that Distribution agreements like caraboa are the way forward. Caraboa are/were the fastest growing energy drink in the UK and are a massive organisation international wise. When other companies see it working for caraboa, I think that could generate interest amongst other companies looking to cut distribution costs to a large number of small outlets.

[fft] 06/6/2022 01:25

Hi fenners. Good point, but I don't think it is completely right. SNWS revenue is about 1bn. That must include revenue from the sale of papers/magazines etc. Returns are accepted. Costs (of nearly 1bn) must then include the cost of buying the magazines/papers from the publishers as well as the fixed items like warehouse/delivery/etc.I also haven't looked at the numbers but if we, for arguments sake, assumed fixed costs (warehouse/delivery/head office) were 100m a year then 900m would be variable costs buying the papers/magazines. The actual loss on losing 5% of revenue would be about 10% of the margin on the papers. So, more than 5%, but less than 100% :-). Think that's right....I feel that Distribution agreements like caraboa are the way forward. Caraboa are/were the fastest growing energy drink in the UK and are a massive organisation international wise. When other companies see it working for caraboa, I think that could generate interest amongst other companies looking to cut distribution costs to a large number of small outlets.

[fenners66] 06/6/2022 00:19

fft and mark
Just read marks comment about 5% fall in revenue and wondered the same about the margin on that.

So I have not looked up where that 5% fall is coming from or the gross margin on current sales - but....

fft your assumption is that the 5% fall comes at (I am guessing here) the average gross margin for all of the business.

However if that 5 % fall means that it is the topslice of income from deliveries that still have to be made then the actual impact may be far greater than your gross margin.

Worst case , operating costs remain the same and that 5% comes off the revenue and it all drops through to the bottom line , i.e. gross margin declines from 6% to 1%

Again - I have not looked , do not know where the quoted sales decline comes from , but am assuming it is part of the overall ongoing decline of newsprint.....

[fft] 01/6/2022 01:24

Mark,Think you have misplaced a decimal point in your savings required PA. With a 50m drop in revenue at 6% gross margin, the savings needed would be 3m. 1.5m of that has been recouped to date by subletting warehouses and the caraboa deal (now being rolled out UK wide) must add extra revenue (higher margins ?).

[marktime1231] 31/5/2022 22:17

Hmmm. One more warning on this and then I will shut up.

"Smiths News is a research client of Edison". So a big pinch of salt.

The main flaw in the analysis is that the analyst Andy Murphy assumes revenue decline of 5% pa is offset by continued "cost base action". Eh? How is SNWS going to keep finding £30-35M pa operational cost savings, you can't just assume that! SNWS most recently said inflation pressure might add £2M to costs. SNWS only hope is to find additional high-margin revenue streams to maintain results, which for now are boosted by one-off receipts but all those have now been received.

Murphy also, while noting the dividend is capped to £10M, keeps projecting a 4.2p total for this year. Just silly when there are nearly 248M shares the maths say the dividend can't be more than "up to" 4p. Even if the board approve that for this year, I do not see how they can afford to sustain that dividend unless they find significant new revenues or somehow conjure serious cost savings in the face of high inflation.

I remain concerned that while we are all attracted by the dividend prospect being dangled this year, the outlook is then highly uncertain, rather bleak as things stand. Not impossible, management have a record of surprising us with news which beats expectation, but let's watch for signs of extra revenue streams getting signed up.

[riverman77] 31/5/2022 20:24

Looks compelling on reading the Edison note, but still have concerns over how much inflation may hit them. Rising driver costs and fuel must surely have a huge impact. So far, they say they are managing this with efficiency savings, but not sure how sustainable this is if inflation persists.

[marktime1231] 31/5/2022 16:34

Edison probably being paid to sell this hard, a nice volume today but there is still a huge seller offloading at this price. Still, let's hope we are set for a climb into ex-div.

The not-to-like is SNWS may be fluffing us by promising a dividend "up to" a level which may not be sustainable when you strip one-offs out of net income.

[fft] 31/5/2022 14:17

Very positive new Edison note, dated 31st may and includes the McColls write off.Increase in target price, reduction in debt, 13% dividend. What's not to like ?hTTps://www.edisongroup.com/wp-content/uploads/2022/05/Smiths-News-Stronger-balance-sheet-leads-to-big-dividend-hike-2.pdf

[profdoc] 30/5/2022 11:53

I see your point fft: one bundle of newspapers versus say 24 cans of drink? It could be a close call on contribution per cm2. I suppose I had in mind higher value per cm2 such as stickers or snacks as the comparator.

[edmundshaw] 30/5/2022 10:46

Are drinks worse than newspapers? I guess it's a volume/weight versus margin thing mainly... but the marginal cost should be good given the journey is already there.