Edison Investment Research - Smiths News (SNWS) Smiths News - Growth potential and a double-digit yield

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Edison Investment Research

Toby Thorrington

Smiths News - Growth potential and a double-digit yield

Smiths News now has contracts in place for 91% of its core revenue to 2029, implying resilience. In addition, its non-core growth activities are beginning to gather momentum, which is already mitigating the structural decline of the core activity. Furthermore, the addressable non-core ‘early morning’ market is sizable and has a profit opportunity of c £160m, which implies that there is potential to more than offset the decline seen in the core operations and could lead to long-term profit growth. This in turn underpins the cash generation and the dividends, and could see further distributions if investment for growth is not required. We have trimmed our forecasts but raise our valuation to 93p/share.

18/11/2024 1 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 - Growth potential and a double-digit yield

Smiths News - FY24 trading good, special dividend proposed

Smiths News - Refinancing releases dividend shackles

Melrose Industries - H224 progress in line with guidance

JDC Group - On track to reach high-end FY24 sales guidance

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