Edison Investment Research - Smiths News (SNWS) Smiths News - 43-week trading update implies upgrades

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Edison Investment Research

Toby Thorrington

Smiths News - 43-week trading update implies upgrades

Today’s 43-week trading update confirms that Smiths News’s demand is returning to normality, and this has been given a boost by sales of ‘one-shots’ as sporting events have returned. With trading expected to be ahead of market expectations, FY21 EBITDA could be c 4–5% higher than the current consensus of £46.8m. Trading beyond the current year has good visibility given that most of Smiths’ contracts are now in place until at least 2024. Net debt is expected to fall to 1.0x EBITDA by the end of FY23, and dividends are well covered and growing. The stock trades on a pre-upgrade forward P/E of 4.6x for FY22e, and yields 5.3% on FY22e DPS.

13/07/2021 2 EN

Underlying

Smiths News

Connect Group is a distributor operating in early distribution and mixed freight. Co. connects suppliers to customers. Co.'s operating segments are: News and Media: News Distribution, News and Media: Media, and Mixed Freight. Co.'s News and Media: News Distribution segment is a U.K. distributor of newspapers and magazines. As of Aug 31 2017, the segment distributed newspapers and magazines to 27,000 retailers across England and Wales from 39 distribution centers. The News and Media: Media segment is a supplier of newspaper and magazines to airlines and a provider of inflight services. The Mixed Freight segment is a provider of next day B2B delivery of Mixed Freight consignments.

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GB00B17WCR61 London Stock Exchange United Kingdom

Provider

Edison Investment Research

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisors and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting.

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Analysts

Toby Thorrington

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Smiths News - 43-week trading update implies upgrades

Smiths News - Growth potential and a double-digit yield

Smiths News - FY24 trading good, special dividend proposed

Smiths News - Refinancing releases dividend shackles

Team Internet Group - Two potential bids at 125p

Mendus - Regulatory endorsement supports vididencel focus

Melrose Industries - Fundamentals remain positive

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