Smiths News Share Discussion Threads

[hillock1] 26/9/2022 08:58

https://www.edisongroup.com/publication/sub-3x-p-e-and-a-15-dividend-yield/31377/

[edmundshaw] 23/9/2022 16:33

Big seller. Just waiting...

[andydaf] 22/9/2022 19:39

Bought some today.Seems to me going forward the management will be returning all they can to shareholders.Of course it is a bit of a bet that newspapers decline slower than many investors think but circa 14% dividend yields are not to be sniffed at.As always GLA

[fenners66] 22/9/2022 18:07

Deleveraging added £0.7m of interest cost savings (was it?, I read it the other day) in the first half, more in the second half after that £7m from Tuffnells and the additional repayments.

[edmundshaw] 22/9/2022 18:02

marktime I think is being unduly negative. I don't have the time to pick up all his points, but (1) Smiths have been undertaking "continued cost base action" successfully almost every year since I first invested in 2011. So not sure why this would suddenly grind to a halt; new technology and working practices and synergies of warehousing seem to be never-ending: intuitively they cannot be, but I see no reason for it to stop suddenly rather than peter out as there are fewer gains left to be made. (2) Deleveraging will eventually add to earnings and, when completed, will allow greater free cash flow either direct to shareholders or to business enhancements (which I would expect to be carefully and prudently considered given the recent past). (3) the steady decline in print sales is hardly new as it has been ongoing for at least 15 years, moreover is still steady and within predictions and is part of the reason the share appears cheap on PE-type metrics and dividends are expected to be higher than in most other businesses. But this is not just cheap, it is crazy cheap. Any significant and reliable growth prospects would be a big bonus.

[davidosh] 22/9/2022 15:36

Just to mention that Smiths News will be featured on the Mello Monday show next week so why not join in and share your knowledge

[1knocker] 22/9/2022 13:20

I have just made a 25% top up at 29.15 It would have been cheaper to have done so yesterday, but in this market (and with this share) as I said in my post yesterday it makes more sense not to buy blind.

[fenners66] 22/9/2022 13:17

marktime1231 - I don't blame you for being cautious.

However my estimate of the second half which I was prompted to estimate the other day , reviewing the first half and extrapolating the added costs etc , was worse than the second half they are reporting.

I imagined a lower second half dividend and perhaps a yield of 10%

But a higher dividend and a prospective yield of 14% is not to be sneezed at.

I had estimated a small reduction in the Bank debt - and I know they could have rearranged the deck chairs in the number they have told us today - but by my calc they have reduced the bank debt by £10m excluding the sale proceeds to Tuffnells.

Remember that adjusted EBITDA will not include the Tuffnells sale.

So that means that they have traded better than I estimated.
World cup stickers are next on the horizon and usually add to the bottom line.

In my experience when a company seems to outperform my guesses and could deliver even more than what I consider a very good dividend 10% , then it merits a serious look at ....

[marktime1231] 22/9/2022 13:03

Everyone needs to be cautious here, the update has drawn attention to items which are spinning the positive. There is no detail on how trading revenue is recovering or being increased to replicate the tens of millions in special receipts which have been propping up the business in the last couple of years ... proceeds from the sale of Tuffnells and winding up the pension scheme etc, which have now all been received, no more one-offs. Occasional special programmes and a boost from World Cup stickers will not cover it.

Good that net debt is down to about £20M, was that an average position or an end-of-term spot figure? What does operating cash flow look like?

The general picture is still a background decline in revenues, but it sounds like they see airport trading has picked up following the end of pandemic restrictions. A shame there was no detail on that. However, and well spotted by fenners, trident and co, expected revenue appears to have declined from H1 to H2 even before the McColls hit. Where are the extra revenues from sales growth, that issue is the key to SNWS having a future. All we have heard so far is a couple of million from sub-letting warehouse space and some sort of deal with Carabao, and from memory that benefit was offset by cost inflation etc.

Some of the analyst comment and punter enthusiam here is premature, Edison assumes "continued cost base action" to offset revenue decline for example. No basis to be so confident until we see the figures and outlook projections based on bankable recurring trade revenues and reliable prospects, operating costs and cash flow. Adjusted earnings could be set to dive off a cliff.

Already a long-term holder having been very enthused at the recovering dividend prospect in recent years I accumulated SNWS in to my biggest holding. I was so worried by the headline message in May possibly hiding a really bad underlying story that earlier this year I sold down my entire stock at 33-35p.

Maybe I am and was being overly negative. Management backing the payment of the maximum allowed 2.7p final dividend surely means this is a solid winner, doesn't it?

Good luck whatever you do but I am out and am staying out.

[phar lap] 22/9/2022 11:02

hTTps://www.edisongroup.com/company/smiths-news/Investment summarySmiths News has successfully performed a turnaround that has seen it return to a core newspaper and magazine distribution operation. While the print sector is declining, revenue is predictable and management has a demonstrable cost-saving track record such that cash flow is strong and profits are broadly flat. Debt is falling despite the potential for a £4.5m bad debt relating to McColl's administration, and dividends are being materially lifted as restrictions are relaxed. We value the business at 92p per share. We note that FY22e EBITDA excludes the bad debt.

[fenners66] 22/9/2022 10:52

Agreed , as I thought above

[trident5] 22/9/2022 10:27

I presume the adjusted EBITDA figure of £40m is struck before the deduction of the McCalls bad debt provision of £4.4m - which they state will be classified as "exceptional" - does anyone here have a different view?

[dillydally2] 22/9/2022 09:54

Toop is going to bag

[norbert colon] 22/9/2022 09:53

Agreed - I still have a 60p target and it was my second largest holding before the recent slide. Very happy to own these as they are well managed and resilient plus we have the very real chance of a bid.

[edmundshaw] 22/9/2022 09:46

If we get back to the 34p level we were at before the slow slide of the last 2 months, we would still be on a prospective yield of 12%.

Maybe the company needs to have a longer track record of delivery before we can get back to a yield of under 7% and a price of 60p+ (albeit dividends may rise after debt is further reduced, so 60p is a base figure), but that is still a prospective doubling of the share price without any great progress. The current price is just bonkers.

[hotdawg] 22/9/2022 09:01

A degree of panic selling going on at the moment , personally I think the post close update is positive enough to hold

[fenners66] 22/9/2022 09:00

The Board expects Adjusted EBITDA (ex. IFRS-16 leases) not less than GBP40m
half year
Adjusted EBITDA (ex IFRS16 leases) GBP20.7m

So marginally lower than the first half
I speculated the other day at lower than the first half including the bad debt write off and inflationary costs - so that was along the right lines , but it looks like they are handling inflationary pressures for now.

The net bank debt reduction to less than 0.5x seems to have repaid about £17.25m , we knew that £7m was proceeds of the sale to Tuffnells so another £10m paid on top which is the same as the allowed amount for dividends.
Does suggest another 2 years and that debt could be wiped out - no stupid get rich quick schemes , please.

I guess that will give room for future dividend increases as long as revenue/efficiencies can mitigate inflationary cost increases.

[martin44] 22/9/2022 08:57

Yes it us good to see the long term holders patience be rewarded however we all need to see a bit more recovery on price!

[fft] 22/9/2022 08:57

Edmund, I wrote twice last week. First one ignored and then a neutral one saying results in November. I pointed out that was no reassurance for the share price Today is reassuringly good.

[lord gnome] 22/9/2022 08:34

Lots of stock to be mopped up before this can make more progress. Offer gradually dropping back. I would guess that we have a large seller taking advantage of today's demand.

[edmundshaw] 22/9/2022 08:32

Add the 2.7 final to the 1.4 interim and we have 4.1p.

At a current price of 29.2p, that is an astonishing 14% yield.

I wrote to the investors contact Smiths News on Tuesday asking about a trading statement given the current situation and share price, and got a polite but properly neutral response. Two days later a trading statement. Perhaps a coincidence, but anyway I am happy with it!!

[fenners66] 22/9/2022 08:29

Seems Hotdawg was close to the mark after all

[fenners66] 22/9/2022 08:28

So I speculated the other day about a full year dividend of 2.65 - 3.00p
this RNS targets 4.10p

Which is around 14%

Maybe this time they will stick to their knitting and generate a stable long term income , in which case
14% is a great return

That's what they need to do and when the market is convinced there will be no new destructive
"master plan" the shares will get re-rated.

Just hope they don't screw it up again.

[lord gnome] 22/9/2022 07:38

My favourite phrase ‘ahead of market expectations’. At 2.7p, the final divi alone will provide a yield of 10%.
This announcement appears to be all good news. Will the share price respond?

[this_is_me] 22/9/2022 07:28

Excellent news: EBITDA not less than GBP40m, last reported bank debt at interims less than £40 million, market cap less than £70 million, dividends £10 million for the year.