Edison Investment Research - Smiths News (SNWS) Smiths News - Interim profits exceed pre-COVID levels

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Edison Investment Research

Toby Thorrington

Smiths News - Interim profits exceed pre-COVID levels

The interim H123 results highlight continued growth in adjusted operating profit, management’s solid control of the business and the ongoing annual efficiencies being delivered. Furthermore, development of new profit streams are beginning to create momentum, which we expect should offset the anticipated decline in core revenues and support the payment of the dividend. This follows the signing of numerous long-term publisher contracts recently, which collectively account for 65% of current revenues. Additional contract renewals could be secured this year. These renewals bolster the company’s cash-generative business model, providing a steady stream of revenue up to 2029 or 2030. Our valuation remains unchanged at 89p, representing c 80% upside.

09/05/2023 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 - Interim profits exceed pre-COVID levels

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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