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...
Smiths News’ FY24 trading was robust and results came in ahead of consensus. This, along with the debt refinancing announced in May, has resulted in lower average debt, which in turn has allowed the company to implement its revised capital allocation policy (communicated in May) and its diversification ambitions. Furthermore, it has lifted its total ordinary dividend from 4.15p to 5.15p/share and announced a ‘special’ dividend of a further 2.0p/share.
Smith News’ H124 results highlighted the robustness of the underlying business, but also revealed the success that management is achieving in creating long-term shareholder value. For example, 74% of revenue is now contracted until 2029, the recent refinancing saves costs and removes the dividend restriction, and the organic growth initiatives are gaining significant momentum. Furthermore, the revised capital allocation policy raises the possibility that modest, self-funded M&A could add further...
Smiths News’ trading update highlights the resilience of its business model in a tough macroeconomic environment, with FY24 results expected to be in line with consensus. As a reminder, our 2024e PBT forecast stands flat at £33.4m despite an anticipated 6% y-o-y decline in revenue to £1.0bn, attributable to management’s tight control of the business and the ongoing annual efficiencies being delivered. Smiths has renewed several long-term publisher contracts in the past year, which could imply vi...
The FY23 results highlight continued growth in adjusted operating profit, management’s tight control of the business and the ongoing annual efficiencies being delivered. Smiths may also renew several long-term publisher contracts this year, which could imply visibility over at least 80% of annual revenues to 2029. Furthermore, development of new profit streams is beginning to create momentum, which may have the potential to more than offset the slow decline in core profits and support the divide...
Smiths News’ recent trading update highlights continued growth in adjusted operating profit, which is anticipated to be at least in line with market expectations of £38.3m (Edison: £38.1m). This represents a marginal increase of 0.5% year-on-year, despite the substantial inflationary impacts seen in the past two years. We expect additional publisher contract renewals to be secured in the next year, which should further bolster the company’s cash-generative business model and underpin the sustain...
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 revenu...
Smiths News announced yesterday that it has secured its fifth major publisher contract renewal with News UK & Ireland, publisher of The Sun, The Times and The Sunday Times. This follows new five-year agreements with Associated Newspapers, Telegraph Media Group (TMG), Frontline and Seymour Distribution, which collectively account for 65% of current newspaper and magazine revenues. We expect additional contract renewals to be secured in the next year. These renewals bolster the company’s cash-gene...
Smiths News’ FY22 results were strong, with revenue and profit ahead of market expectations. Continuing adjusted PBT increased by 0.6% to £31.1m as financing costs reduced and net debt fell to £14.2m. Management was successful in mitigating inflation and controlling costs within budget. FY23 has started well, with uplifts in one-shot revenues and ancillary income. However, we have upgraded our forecasts, and an increase in the discount rate has driven a decrease in our DCF valuation from 94p to ...
Smith News’ FY22 trading update highlighted slightly better trading than we expected as the market normalised and publishers raised cover prices. Furthermore, management was able to control costs within budget. The new financial year has started well with increased One-shot sales, which are likely to increase with the upcoming FIFA World Cup and the forthcoming coronation. We have raised our FY22 and FY23 estimates modestly, which drives our increased valuation from 92p to 94p. Smiths News is tr...
Smiths News management again delivered on its promises and produced a strong set of interim results, with PBT up 6.3% and EPS up 10.9%. The interim dividend was nearly tripled due to a combination of already announced loosened banking arrangements and considerably lower debt levels. This implies a full-year dividend of 4.2p, which could offer investors a yield of c 13%. Underlying market conditions continue to normalise and with the one-off proceeds now received, we have increased our valuation ...
Management delivered on promises again as Smiths News produced a strong set of FY21 results. Operating profit increased nearly 13% and net debt fell to £53m (1.2x net debt:EBITDA versus c 2.0x in August 2020). Underlying market conditions are normalising and the company has adopted new sustainability targets, which is encouraging. We have raised our forecasts to reflect better-than-expected trading while acknowledging that inflationary pressures exist in the market. On the back of the upgrade, w...
Management delivered on promises again as Smiths News produced a strong set of FY21 results. Operating profit increased nearly 13% and net debt fell to £53m (1.2x net debt:EBITDA versus c 2.0x in August 2020). Underlying market conditions are normalising and the company has adopted new sustainability targets, which is encouraging. We have raised our forecasts to reflect better-than-expected trading while acknowledging that inflationary pressures exist in the market. On the back of the upgrade, w...
Edison Investment Research Limited Smiths News (SNWS) Initiation - Predictable cash flows and growing dividends 19-Oct-2021 / 07:00 GMT/BST London, UK, 19 October 2021 Smiths News (SNWS) Initiation - Predictable cash flows and growing dividends Smiths News has successfully performed a turnaround of the business 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 clearly demonstrable cost-saving track record such that cash flow is strong and profits are broadly flat, ...
Smiths News has successfully performed a turnaround of the business 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 clearly demonstrable cost-saving track record such that cash flow is strong and profits are broadly flat, post COVID-19. This means that debt is being paid down and dividends are likely to become an increasing feature. We value the business at 77p, twice the current pri...
Full Article at IIR has reaffirmed its Recommended rating for PIA after undertaking a review post the appointment of a new Portfolio Manager, Harding Loevner. The full report can be found on the IIR website. On 26 July 2021, Pengana International Equities Limited (PIA) announced a fully franked dividend of 1.35 cents per share for the June quarter. This represents an 8% increase on the March quarter dividend and takes the total dividends declared for FY21 of 5.1 cents per share, fully franked....
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 F...
The declaration of the interim dividend, albeit modest, is the next step in the recovery of Smiths News as it signals that not only was trading at the interim stage in line with management expectations, but also that the company is on track to meet market expectations for the full year. Trading beyond the current year also has good visibility given that most of its contracts are in place until at least 2024. Debt is expected to fall to 1.0x EBITDA by the end of FY23, and dividends are well cover...
The general evaluation of CONNECT GROUP PLC (GB), a company active in the Publishing industry, has been upgraded by the independent financial analyst theScreener with the addition of a star. Its fundamental valuation now shows 4 out of 4 possible stars while its market behaviour can be considered as moderately risky. theScreener believes that the additional star(s) merits the upgrade of its general evaluation to Slightly Positive. As of the analysis date July 10, 2020, the closing price was GBp ...
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