Stv Share Discussion Threads

[professor x] 19/9/2012 16:44

I'm starting to warm to these end of day movements :-).

[che7win] 18/9/2012 09:15

I bought more of these just before the results in the 90's even though I'm overweight.
Looks like we're starting to trend up at last - if you're thinking of investing, now's a good time IMHO.

My average is a lot higher, probably in the 120's. Debt will transfer to equity going forward starting in the second half of the year.

I expect the market needs the next set of results to click that this is a cash generative business going forward and to see that debt is falling steadily.

The window of opportunity exists now to get in before the rerating. This stock reminds me of FIF in many ways.

[che7win] 15/9/2012 07:29

This is a great cause organised by STV, it's STV at its best:





Amazing to think that the Scottish government endorses it By matching every penny raised.

[mikeelkin] 12/9/2012 18:12

Thanks Chew7in, that is helpful.

At the risk of tempting fate there should be limited risk at the current share price - there is support at 80p and the market is assuming the worst; and the upside opportunity is considerable if it all goes according to plan, but patience is required.

[che7win] 12/9/2012 17:39

mike,
My question to the company was:
"I see from note 13 that the litigation matters cost £(3.6) so I'm assuming that the monthly payment to ITV happened for the interim period resulting in a payment of £600k for six months? Would that be correct and would I be right in assuming these costs for the second six month period will be via stock transfer?"

Reply:
"On your question in connection with the terms of the ITV settlement, I confirm that your understanding is correct."

So no more cash payments.

I also raised a few questions since the results with the company, they expect debt to fall in the second half in line with market expectations. See my above post.

Remember that the second half is the stronger half (debt rose in first half previous years), autumn is the peak for advertising revenue and a lot of the production side will receive payments second half.

The pensions payments will be ongoing but I know that this is a priority with the company and I have raised it numerous times.

You may have noticed the tax rate in the accounts also. I clarified with the company that they don't expect cash tax to be paid until 2014 at the earliest as tax losses from prior years will be utilised.

I hope that helps but DYOR.

[mikeelkin] 12/9/2012 16:08

Che7win

Have you had definite confirmation from Rob Woodward that those cash payments of £600k to ITV have stopped? If so do you know when the last one was made?

I have been looking back through the posts and there was a lot of optimism some months ago that the payments would have ceased during the first half which didn't happen, and by now the business would be generating cash and debt would have started dropping noticeably. That hasn't happened either.

It is disappointing that far from reducing debt has increased by 1.6m over the past six months, so even without the ITV payment it would have only dropped by 2.0m.

The annual pension payments of 4.2m are absorbing a lot of the operational cash. Does anyone know if those payments are indefinite or will be reviewed at a specific point?

I cannot see any significant upside until the market sees tangible evidence of cash generation resulting in significant debt reduction and payment of a dividend. If that happens there is the potential for quite a sharp increase as the market cap is so low but I cannot see that happening unless / until the full year results delivers the goods in February.

I have been in this share about 18 months, topping up last March when I thought it was about to take off so currently I am seeing a significant loss. I must admit I am both very disappointed and fed up with it.

Crawford hasn't posted for some time after posting frequently in the past. Are you still in this crawford?

[che7win] 12/9/2012 13:02

Good write up pdosullivan,
I think you have hit the nail on the head with debt paydown - as I mention above we should be below £34m in 2014.

Personally, the market doesn't realise that debt will reduce from now on which will increase the equity valuation from here on in.

I honestly wouldn't accept a takeover below 170-180p right now and I'm prepared to wait until we get there. If they achieve their KPI's, then STVG will be worth a lot more.

My big fear is a takeover happening in the next year.

[pdosullivan] 12/9/2012 12:30

Afternoon all - I've written a detailed blog on STV that I think you might be interested in. Feedback, as always, is very welcome:

[che7win] 31/8/2012 14:34

I expect year end debt will be around c£46m-£47m by year end.

Next year, debt should fall to around £41m then 2014 it should be around £35m. That is what I am conservatively pricing in going forward, given that the company will be paying higher tax.

Debt could actually be reduced by £600k per month but they have plans such as the Wallace feature and pilot Catchphrase show they're working on for ITV.

I'm quite happy to hold this one, no intention to sell below 150p.

Phil - I was impressed with TNI's results, another one that looks good value to me.

[roundup] 28/8/2012 16:47

I see it is an acquisition

[roundup] 28/8/2012 16:45

Has David Shearer bought 25000 shares, or sold?

[che7win] 24/8/2012 13:09

Results presentation here:

[che7win] 24/8/2012 12:10

I've now confirmed with the company that my understanding above is correct - the cash payments to Itv have stopped and it's via stock transfer now.

They also confirmed that net debt should fall to the conscensus level of c£46m in the second half.

That would be excellent, towards their target level of 2x EBITDA.

[che7win] 24/8/2012 09:10

I haven't read any brokers reports yet but good to see both brokers have buy ratings since the results:



They have a consensus price target of 178p.

My impression is that debt will start falling going forward.
The recent production wins probably tying up some working capital in the short term.

[che7win] 23/8/2012 09:42

A decent set of results, but the debt reduction I expected to happen quicker.

I had clarified with Rob that they had received agreement with ITV to make the remaining payment through stock transfer. That was on 11th June.

I see from note 13 that the litigation matters cost £(3.6) so I'm assuming that the monthly payment to ITV happened for the interim period resulting in a payment of £600k per month over the six months. If this is not occuring going forward, that will free up £3.6m in cash in the second half (or £7.2m per year going forward).

They have stated today their debt target:
"The trend of net debt reduction continues as we progress towards the target ratio of net debt below two times EBITDA."

The rest of the company performing quite well under the current economic climate.

I agree - I would like to see a 4p dividend from next year - should be possible when the ITV litigation is out of the way (it would only cost around £1.6m).

Mike - the big trades happened yesterday.

Peel Hunt has reiterated their 216p target this morning.

[mikeelkin] 23/8/2012 09:38

The market's reaction seems to be a one big yawn.

It needs to see debt coming down, greater evidence of cash generation. The cautious outlook statement and continued equivocation on the dividend did not help.

[philjeans] 23/8/2012 09:07

Figures are quite good; but I still prefer TNI where debt is coming down much faster.

No divi yet, for either.

TNI up 40% since their figures and still on a P/E of 1.5.

Very good value here as well but not sure the market will be impressed.

[che7win] 22/8/2012 13:33

Some big trades today.

Numis have an increased price target of 140p, it was 122p previously - update today:

Date Company Name Broker Rec. Price Old target price New target price Notes
22 Aug STV Group PLC Numis Buy 89.13 140.00 140.00 Retains

[che7win] 18/8/2012 11:03

I expect advertising to have been slow over July/August, September is a more important month.

I guess we will hear on Thursday.

[che7win] 17/8/2012 12:30

Professor X,
the price looks artifically low today, knocked down by 10 sell trades all within 25 seconds at 9:41 this morning.

[professor x] 17/8/2012 12:25

Not sure what is going on here as you can sell well above the mid price at present!!

[che7win] 14/8/2012 21:14

Local city tv licences: