Last close As at 05/08/2026
GBP0.73
▲ 1.00 (1.39%)
Market capitalisation
GBP179m
Research: Industrials
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 covered and growing. The stock trades on a forward P/E of 4.2x in FY22e, which is undemanding, with an attractive 5.6% yield.
Smiths News |
Interim dividend declared; yield attractions
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Distribution |
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21 June 2021 |
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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 covered and growing. The stock trades on a forward P/E of 4.2x in FY22e, which is undemanding, with an attractive 5.6% yield.
Payment of 0.5p/share, goes ex-dividend on 1 July
At the interim results on 5 May, Smiths News stated its ambition to declare an interim dividend on condition that trading performance remained in line with management expectations. Today, it declared an interim dividend of 0.5p/share, which goes ex-dividend on 1 July and will be paid to shareholders on 30 July.
Dividend declaration implies solid trading
The declaration implies that trading in the period from the interims until now, and for the next few months, is at least in line with management expectations. This paves the way for the declaration of a final dividend in respect of the current year, ending on 31 August, which will be announced with the prelims on 4 November.
Consensus estimates imply y-o-y stability
Consensus forecasts, which are based on the estimates of two analysts, show relatively stable PBT and EPS for FY21 versus FY20, and include the expectation of a total dividend of 1.6p for FY21 versus EPS of 9.2p. This appears to be consistent with the 0.5p interim dividend declared today on the assumption of a one-third/two-thirds split in the payout. It also implies that the FY21 dividend is c 6x covered by consensus earnings, although the company is targeting cover of 2x, which could imply upside to payments after 2023 when the dividend cap is removed.
Valuation: Sub 5x P/E, 5.6% yield in FY22e
Consensus EPS of 9.2p in FY21e and 9.8p in FY22e implies a P/E of below 5x in both years, which is undemanding in our view. The resumption of the dividends is also encouraging and consensus implies a yield of 3.9% this year, rising to 5.6% in FY22e, which we believe is attractive. The company also has a longer-term ambition to pay ‘special’ dividends from excess cash.
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Consensus estimates
Source: Refinitiv |
EDISON QUICKVIEWS ARE NORMALLY ONE-OFF PUBLICATIONS WITH NO COMMITMENT TO WRITING ANY FOLLOW UP. QUICKVIEW NOTES USE CONSENSUS EARNINGS ESTIMATES.
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Research: TMT
Through its subsidiaries, HDT and CarpathiaSat, 4iG has entered into a preliminary agreement to acquire a controlling 51% stake in Space-Communication (Spacecom), a Tel Aviv-listed satellite operator, by way of a US$65m private placement. Spacecom owns and operates four geosynchronous satellites, with a regional footprint, including Hungary, via its AMOS-3 satellite. The acquisition of Spacecom is a logical step for 4iG as it establishes a vertically integrated IT services and telecoms business in Hungary (and regionally). Its JV, CarpathiaSat, has already secured the rights to operate geostationary satellites over Hungary for a period of 20 years from 2024. 4iG has not confirmed how it will fund its investment, but we note that it is expected to complete at a similar time to 4iG’s pending acquisition of DIGI Group. On a pro forma basis, these businesses look set to generate run-rate EBITDA of HUF88bn (c US$300m), unlocking substantial debt funding capacity for the enlarged group. Both DIGI Group and Spacecom are transformational deals for 4iG; we will update our estimates once the deals complete.