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Smiths News (LSE: SNWS)

Last close As at 22/11/2024

GBP0.61

▲ −0.20 (−0.33%)

Market capitalisation

GBP152m

Smiths News is the UK’s largest newspaper and magazine distributor with a c 55% market share covering 24,000 retailers in England and Wales. It has a range of long-term exclusive distribution contracts with major publishers, supplying a mix of supermarkets and independent retailers.

Volumes of newspaper and magazine sales have been falling at an average rate of c 5% pa for many years as first TV and radio and then online have taken over as the primary source of news consumption by an increasingly younger audience. Cover price inflation has partially offset lost revenue, but Smiths News has had to, and continues to, cut costs repeatedly to make up the shortfall. These characteristics are likely to persist into the future, but Smiths is developing new revenue streams to offset these pressures.

Latest Insights

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Industrials | Update

Smiths News — Growth potential and a double-digit yield

Industrials | Flash note

Smiths News — FY24 trading good, special dividend proposed

Industrials | Update

Smiths News — Refinancing releases dividend shackles

Industrials | Flash note

Smiths News — On track to meet guidance
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Sector

Industrials

Equity Analyst

Andy Murphy

Andy Murphy

Director, Financials & Industrials

Key Management

  • David Blackwood

    Chairman

  • George Cooper

    Head of corporate and finance

  • Jonathan Bunting

    CEO

  • Paul Baker

    CFO

Balance Sheet

Forecast net debt (£m)

6

Forecast gearing ratio (%)

250

Share Price Performance

Price Performance
% 1M 3M 12M
Actual 3.7 5.5 33.0
Relative 7.4 8.2 23.1
52 week high/low 65.6p/46.0p

Financials

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.

Y/E Aug Revenue (£m) EBITDA (£m) PBT (£m) EPS (fd) (p) P/E (x) P/CF (x)
2023A 1091.9 42.7 33.4 10.68 5.7 3.4
2024A 1103.7 42.6 34.1 10.16 6.0 3.4
2025E 1037.5 40.9 33.9 10.49 5.8 3.6
2026E 1006.4 40.0 33.8 10.46 5.8 3.7