The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Sounds good, and markets were always likely to be a bit muted today as the tax year closes (for those outside tax efficient wrappers)
And the reverse is true, perhaps, on Monday as the keen fill their new ISAs
I can't think of many better places to stick a wedge of cash than S4
- massive reduction in cost due to payments completed for mergers
- lower staff numbers leading to reduced salary bill
My 2c it doesn't matter if sales drop a few % as the costs have dropped off a cliff.
shhh, can you hear the sound of profitable trading happening?
definitely won't be suprised to see another buy back mid may after Q1 RNS (possibly sooner)
or a recommendation to vote on a small divi
Welcome any new holders here. If you're wondering why the SP is going up; here's my 2c (as someone that has followed S4 for a few years, that's all)
Think of a seasaw. On the one side you've got revenue, the top line
on the other side you've got costs and profit/loss, the bottom line
There may be some changes to the top line, e.g. 5% less revenue, the same, or even more (probably on balance a bit less in 2024)
The action is all happening on the other side of the seasaw. The hippo is shedding the pounds. Broadly speaking this is
- less staff
- the end of those expensive payments to merged companies
I'm of course over simplifying a massive organisation.
But back to the hippo, and they will be able to use some of the newly shed pounds to buy back some more shares (probably good value this side of £1) or propose a dividend to attract those all important fundies
Meanwhile, it's nice to see that S4 are focussed on their core customers; now representing 55% of sales, and probably not a bad thing that 79% of sales in US.
Roll on the first profitable quarter, establishing a run-rate and turning this into a cash machine.
Happy Easter all.
From The Times
https://archive.is/DWUy6
My 2c; why would anyone think SMS would sell his golden share? I very much doubt he needs money; but is in this to build something big and successful
With runrate turnover north of £1bn and EBITDA margin of 10-11% I make that about £100m to play with in 2024. Let's say £10m is due to founders of member companies in earn out. Let's say there is a continued 5% reduction in sales; let's call it 15% to be cautious. Assuming margin remains the same that leaves £75m
At today's marcap of £224m that's a 33.5% potential return. Use £25m to pay off debt, £25m to keep as cash and £25m to return to shareholders in some form.
I really wouldn't be suprised to see a maiden dividend declared for FY2023 in March. The numbers support it, and SMS is an FD by trade. having a divi, however small will open up S4 to certain funds that have that as a requirement.
The buying spree stopped a long time ago and costs have been cut significantly whilst protecting core margin.
GLA, DYOR and one not for the faint hearted
Interesting interview with Wesley thanks for sharing.
Also interesting how he was branded as co-ceo (or similar) and has been in business for 23 years as monks. no mention of S4/ SMS
they've won the award for best AI agency
next stop formalized succession planning? and smooth handover plan - check.
we're all mortal afterall and hopefully not for another 10 years.
sounds like S4 are completely re-defining the content business in terms of cost and client agreements
it's now all about output and outcomes
not body count x number of hours
there will come a time where this becomes a USP for S4 and clients won't put up with the old ways
It's got a certain ring to it :-)
https://www.marketscreener.com/quote/stock/S4-CAPITAL-PLC-54379378/news/Media-Monks-Launches-AI-Solution-Monks-Flow-at-CES-2024-45693858/
Thanks for Sharing Alex. Very impressive figures and will check them out. At face value whilst I know harbour will have used harbour cash to buy back these puppies, it does prove two things beyond doubt:
1) The board believes the SP is undervalued and offers a good place to park cash (in buy backs)
2) That Harbour are throwing off cash.
Trimming 17% of one's shares in two years whilst paying a healthy divi and planning to buy other firms + go debt free next year. What's not to like..
>It is very striking to see how much the share count has fallen as a result of the ongoing buybacks.
>August 2021: 926m shares
>End-2022: 847m shares
>End-November 2023: 770m shares
Something that might help is tech services; the highest margin part of the business.
By revenue comparing H1 last year and this it went from 6% of the business to 16%
not too shabby for 35.7% operational EBITDA margin
Interesting comments around the last RNS to support the thesis that the sell off is some-what overdone
https://www.ftadviser.com/mortgages/2023/09/12/disappointment-for-metro-bank-as-pra-stalls-on-airb-application/
from memory I think someone in the US bought 5% just after the last RNS
{I'm sure both of the above have been shared before}
As we lowly shareholders see snippets of information; such as the technical review of pipeline ok, and salaries paid by Baghdad, increase in production, conversations with US; I wouldn't be suprised to see a resumption of flow northward. Seems to be some accumulators in action with the SP. Now that Erodgan has a net receivable after Paris arbritation fee (see Reuters article linked the other day) who has anything to lose from turning the taps on?
The main thing I took from the Reuters article is
Turkey also calculates Iraq owes $950 million as a result of ICC arbitration, net of damages Turkey has to pay Iraq.
Not sure what the basis of this is, but it certainly balances the seasaw a bit. With Turkey previously owing 1.5bn I couldn't quite see how they would move onwards.
Iraq must be hurting having to support KRG without any revenues coming in. I don't think it's rocket science to get the oil flowing again. We'll probably hear soo that it's happening via SOMO like it used to.
Interesting development
Tangible book value per share has gone from £4.29 at 31 Dec 22 to £4.42 at end of H1
It's funny, you'd imagine those extra 13p to be reflected in the sp
SP was 1.21 at end of year
SP now 1.03
good that no one has a short position
https://www.shorttracker.co.uk/company/GB00BZ6STL67/
or if they do it's less than 1/2 %
Earnings per share now 7.8p in H1 from -2p the previous 6 months
I guess about 7-8% return per half year is a decent return vs the uncertainty of the economy
anyone know how many more assets than liabilities we have?
For what it's worth - a 5 year comparison against Google/alphabet
https://www.google.com/finance/quote/SFOR:LON?comparison=NASDAQ%3AGOOG&window=5Y
How about that Google is up 30% in the last 6 months and we're also an ad sales company. + 12 month high
we're just above 12 month low
could be a good time to buy; just sayin'
one (real) bit of good news and we'll probably be triggered
I think sales are due to increase this year by 2-4%
Better to pay down the debt first as that has a real cost.
I know share buy backs reduce the number of shares in circulation and make us all richer, but they also have a corresponding cost, so in the short-term are net neutral.
However the best argument for an FD to launch a buy back is if the rate of return on buying the shares is better than the IRR for other investments. There's a sound argument here as SP moderately undervalued. (moderate understatement of the day)
One of this things I like is that there are £956m more in assets than liabilities; not bad for a £207m marcap
search "£956" on this page to find the reference
https://otp.tools.investis.com/clients/uk/metro_bank_plc/rns/regulatory-story.aspx?cid=1352&newsid=1671947
and on balance banks tend to get more profitable with interest rates going up
I've downloaded the full list of short positions (xlsx from link)
There are 253 short positions in the overnight file and Odey seem to only have one
https://www.shorttracker.co.uk/manager/odey-asset-management-llp/
I wonder if they'll need to start unwinding positions as money floods away from the reputational damage. We all know that it's not always the facts but the fear that destroys fund managers.
https://www.shorttracker.co.uk/company/GB00BZ6STL67/
Perhaps they knew ahead of time and started a few weeks ago.