Last close As at 05/08/2026
GBP0.72
▲ −1.00 (−1.37%)
Market capitalisation
GBP179m
Research: Industrials
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 visibility over c 74% of annual revenues to 2029, with potential for expansion. This should further bolster the company’s cash-generative business model and underpin the sustainability of the business in the long term.
Written by
Smiths News |
On track to meet guidance |
Trading update |
General industrials |
2 February 2024 |
Share price performance
Business description
Analysts
Smiths News is a research client of Edison Investment Research Limited |
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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 visibility over c 74% of annual revenues to 2029, with potential for expansion. This should further bolster the company’s cash-generative business model and underpin the sustainability of the business in the long term.
Year end |
Revenue (£m) |
PBT* (£m) |
EPS* |
DPS |
P/E |
Yield |
08/22 |
1,089.3 |
32.3 |
11.7 |
4.2 |
4.0 |
8.9 |
08/23 |
1,091.9 |
33.4 |
11.3 |
4.2 |
4.2 |
8.9 |
08/24e |
1,026.4 |
33.4 |
10.8 |
4.2 |
4.4 |
8.9 |
08/25e |
995.6 |
33.3 |
10.7 |
4.2 |
4.4 |
8.9 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Despite current economic volatility, the combination of sustained margin mix, tight cost control and new profit streams has enabled Smiths News to maintain its strong performance in FY24 thus far, with management expecting results to be in line with consensus. Despite our 2024e revenue forecasts declining 6% year-on-year to £1.0bn, we expect ongoing cost savings activity to expand margins, forecasting the adjusted EBITDA margin to edge up from 3.9% to 4.1%. Smiths may also renew several additional long-term publisher contracts this year, which could imply visibility over at least 80% of annual revenues to 2029.
Furthermore, Smiths News is making significant progress expanding adjacent services, which have the potential in the future to more than offset secular decline in the core business and result in flat or potentially rising group profits. The most advanced initiative is Smiths News Recycle, a waste recycling service that has already attracted over 4,000 paying customers, with the company anticipating that this new service could add c £1m to operating profit in FY24. Smiths currently trades on an FY25e P/E of 4.4x with a 9% yield, which we believe is attractive for a company with such cash-generative characteristics.
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Research: Real Estate
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