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Royal Mail Share Chat (RMG)



Share Price: 440.00Bid: 439.40Ask: 439.90Change: 0.00 (0.00%)No Movement on Royal Mail
Spread: 0.50Spread as %: 0.11%Open: 431.40High: 440.50Low: 429.30Yesterday’s Close: 440.00


Share Discussion for Royal Mail (RMG)


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MY21
Posts: 3,697
Off Topic
Opinion:No Opinion
Price:399.90
View Thread (4)
Daily Telegraph says Hold
15 Oct '14
Is Royal Mail a bargain?:

Royal Mail remains a solid income generating investment for the long term. The U.K. letter and package giant generates plenty of cash, pays a handy dividend and its dominant position in the postal market gives it pricing power. That said, investors have had a bumpy ride during the first 12 months of listed life.

The shares which listed at 330p last October, soared to 615p in January, and have now settled at a more reasonable level around 394p. The future for the 500-year-old postal service will not be easy. Parcel delivery volumes are now struggling having grown rapidly as more people shopped online. Letter deliver is in long term structural decline but not performing as badly as expected.

That said, both units combined are providing a steady performance which will provide returns for investors. Competition in parcel delivery is fierce. TNT Post U.K. is opening mail delivery services in London, Manchester, Liverpool and Birmingham, amongst other cities this year and by the end of 2015 it is hoping to have reached about a quarter of the U.K. postal market. Royal Mail is also behind the times in terms of technology.

Rival package delivery services DPD U.K. and smaller player U.K. Mail currently offer a one-hour service. Royal Mail is fighting back by trailing a Sunday delivery service and has slashed prices on smaller packages ahead of this Christmas. The company needs to accelerate this further and move to automated parcel operations, say analysts from broker Espirito Santo who believe this could deliver savings of up to £450 million.

The company is also balancing falling volumes with stamp price increases that are inflation linked and are offsetting this. Letter volumes fell by 4% in the year ended March, which was at the top end of expectations and letter revenue only declined by 2% to £4.62 billion during the year.

We still like the long-term strength of the business and the dividend income, with the shares offering a forecast yield of 5.3%. Royal Mail at 393.5p -4.99p Questor Says “Hold”.
 
richard12345
Posts: 585
Off Topic
Opinion:No Opinion
Price:399.90
dividends further
15 Oct '14
further to the earlier post, the problem with the GLS case isnt the fine, but that the fine is unknown. once its specified absolutely, then its no longer a problem.

while they have excess properties, they could sell these to enable generous dividends. once the properties are all sold, then it then becomes trickier.

their property, plant and equipment is worth £1.989 billion. with today's sale, this must become £1.878billion.

their accounts say "other non current assets" have increased by £800m, not sure what that would be.
richard12345
Posts: 585
Off Topic
Opinion:No Opinion
Price:399.90
View Thread (2)
dividends
15 Oct '14
@ARSENAL17

they should always keep a healthy amount of cash, it would be unwise to pay all the cash out!

the dividend also should be a subset of profits, but the profits were £1280m which is a lot more than the cash.
the cash is 37.3% of the profits. so they can give a generous dividend. sell more London properties and the dividend can be more generous.

the longer they delay the dividend, the more cash they can accrue for the dividend. but they can give a smaller dividend earlier, and top this up according to how much they have made.

any promise should be a formula and not a specific amount. you shouldnt count your profits before they hatch.

also higher dividends draw in more investors which then pushes up the share price, provided the dividends are a subset of profits. the funds wont like it if dividends exceed profits (dividend cover).

because there are so many uncertainties, eg a general election and possible coalition with UKIP, for this year I think it may be better if they delay it to a dividend at the end of the year.

on the other hand, giving several smaller dividends distorts the share price graph less. it takes effort to locate ex dividend dates, many investors just look at the graph eg with moving averages, and dividends are a spanner in the works as the market makers dip the price by the dividend on the ex divs.

one other thing they can do is share buy back with some of the cash, there are approx 52 x 5 = 260 trading days a year. £111m means they could buy back £426923 of shares each day for a year with that which would help support the price. At the moment that would be some 100 thousand shares. Or just do this when volumes are too low. And then sell the rebought shares once they are reasonably in profit.

they may not have control over the share price, but they are increasing profits and cash, and have control over the dividend. the dividend amount is an intrinsic, the execs have full control over this, but only limited control over the share price which tends to be a standoff between the market makers and funds.

now the funds dont like legal cases, so its better to give a generous dividend AFTER the GLS case is complete.
I dont see why they cant give a 40p dividend, PROVIDED they sell off another £289m of properties. That dividend would be £400m which would come from todays £111m and the £289m, their cash would be unchanged, and the dividend would be 31.25% of the annual profits.

this would be a fund magnet which would push up the share price. Standard Life would be at the front of the queue. but it needs to be done once the GLS case is paid out or cancelled.
ARSENAL17
Posts: 285
Off Topic
Opinion:No Opinion
Price:399.90
richard
14 Oct '14
Sorry to put a dampener on your thoughts but we both know that RMG will not be paying out a dividend that high as im sure the money will also be used for investment thats the reality of the PLC world
abouttosell
Posts: 25
Off Topic
Opinion:No Opinion
Price:399.90
Congratulations Richard
14 Oct '14
Wow Richard you have finally managed to post an interesting and readable post onward an upwards well done for finally posting something of interest in a concise way this is truly the first time I have read your post in full and it makes sense keep it up just get to the point as you clearly have knowledge in these matters however most of your posts just drivel on this new style is the way forward well done
richard12345
Posts: 585
Off Topic
Opinion:No Opinion
Price:399.90
View Thread (3)
RE: Dividend>?
14 Oct '14
I would say they should keep their options open and not make dividend promises too far in advance.

they already have 366 million of cash, presumably now £477m, a 30% increase of cash. there are enormous uncertainties ahead, and the cash enables them to get around different problems. this sale would finance 11.1p of dividend, and they could afford 47.7p of dividend.

in harsh economic conditions, you need to specialise, a postal company shouldnt develop property, and a property development company shouldnt do postal, with property prices very inflated, selling off unused property is a very good idea

its possible they will use this kind of announce to stabilise the price around 400.

if property prices fall, companies who hold onto unused property could lose a lot of asset value, which would then worsen the share price.

although I am out now from shares, I'm following the scene to study what happens. I think some companies may have reached the low already, but I wont invest until the market trend is up.
MAO3
Posts: 628
Off Topic
Opinion:No Opinion
Price:399.90
RE: Dividend>?
14 Oct '14
RNS states "used for general corporate purposes". No distribution to shareholds here
Charlie156
Posts: 33
Off Topic
Opinion:No Opinion
Price:399.40
Paddington Bear
14 Oct '14
Property deal caught me on the hop. Had a little contrarian nibble at 4 quid.
Spottie
Posts: 102
Off Topic
Opinion:No Opinion
Price:399.70
View Thread (3)
RE: Dividend>?
14 Oct '14
At flotation, RMG indicated that it would pursue a "progressive dividend policy". The next dividend payment will proably be due in January. 2015 On 19th November RMG will announce its financial results, so that's when we'll be likely to find out.
lewistuffnell
Posts: 32
Off Topic
Opinion:No Opinion
Price:401.40
View Thread (3)
Dividend>?
14 Oct '14
Will this be paid back to share holders via dividend?



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