I am there for more SKT so sock ‘em to me!
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I am there for more SKT so sock ‘em to me!
Unfortunately the price of the toys have gone up. I’m greedy so hoping to exit higher than today…but it’s quite likely I might need to downgrade the specs on the new toys.
But good luck to you…I like your ambition
I have a very simplistic view of Sky, now that they company has gone through the valley of death and come out on the other side with financials looking strong and prospects for growth realistic.
Current market cap -$390m so market cap after $70m capital repayment = $320m.
Based upon company's forecasts for F23, stock is trading on :
PER of 5X to 6X : NPAT of $50m to $60m
Enterprise multiple of 1.7x to 1.9x : EBITDA of $150m - $170m
Dividend yield of 5.6% to 7.5% : dividend payout of $18m - $24m
Plus share buyback .
One of the cheapest stocks in the world.
I think the issue I have with Skt is that they have spent the last two years taking a lot of cost out the business and selling some assets…the easy bit. But now it back to their core business and how they will grow it. They don’t appear to have any robust plans. I think they have some pricing power around their sports package due to some exclusivity of key sports but not much else that customers can’t get similar elsewhere for cheaper.
Im pretty sure that’s why they were looking at mediaworks for the radio advertising revenue that they could bring advertisers across to the tv medium as well.
Skt key customers are the older monied who like the simplicity of one box, one bill and one on and off button.As this group ages and moves on Skt new customers are going to be young media and tech savvy who are used to getting around paying for access by using vpn and sharing of accounts etc.
Skt is cheap because no one can see where’s its going.
Just my opinion.
Disc: Ex sky customer and temporary Skt shareholder
Yes, there is not a clear way forward put to the investment community around how Sky will maintain (let alone grow) earnings per share (and I am talking real earnings per share, not smoke and mirrors from a share cancellation).
When I first started buying Sky shares the company was still gushing FCF.
- Between 2017 and 2019 Sky produced $428M of FCF.
- Between 2020 - 2021 (the time under Martin's tenure) Sky still produced another $72M FCF despite paying huge premiums for content and wasting cash on things like RugbyPass, stadium naming rights etc.
In that 5 year period Sky produced half a billion dollars of FCF. Though I knew FCF would decrease over time, given so much cash was still being produced there was every reason to think Sky would be able to grow by some sort of meaningful M&A opportunity. I strongly favoured Sky buying Vocus NZ - with the release of Spark Sport and their success in picking up important sports rights there was just no way Sky would get blocked buying a relatively small broadband provider. However Vocus NZ have a fantastic fibre network and we can now see that the $700M asking price at the time was a bargain. Buying Vocus would have opened up other opportunities with players like 2D and Sky-Vocus would have had a strong hand in negotiations.
I did push for Sky to consider this, but they simply were not interested. Now they seem to have cooled even on the wholesale broadband deal - they don't seem to be pushing very hard to get more customers, have not extended the offer to bundle streaming services etc. Meanwhile the new 2D has cancelled their NEON and SSN deal with Sky. Not great.
All that really matters now is what are Sky's prospects moving forward. Nobody (least of all me) is suggesting that Sky is going to go broke or anything like that. However there are some huge risks to the company still with key content rights, threats of new entrants and unlike my forward predictions of the FCF profile in 2017, doing the same analysis from 2022 - 2026 (inclusive) makes for some pretty grim reading in my opinion.
SM was absolutely right in that she needed to explore M&A opportunities before returning cash to shareholders. It is just that her target asset (MW) was completely unacceptable given the likely amounts of money involved contrasted to realistic views of how big the synergies would actually be.
Now some people will be very unhappy with me making this post because they view these issues in a black and white upramper/downraper way.
But I put it to you that this is a more accurate reflection of how my views have changed over the past five years. So far as I am concerned, Sky had some big opportunities over the last 5 years (and the cashflow to support taking advantage of the opportunities). They thumb sucked over that period, just focussed on slashing costs (whether they went too far, time will tell) and now are in a much weaker financial position - which means fewer meaningful things they can go after in the future.
Just my very humble opinion as always. Others will have an alternative view on the future for Sky, and that is ok too.
Just been doing my market research on what the competition is up to as it was the spark agm today. It’s always a challenge to find any data on how spark sport is performing but I’ve highlighted what they had to say today….
As Justine noted, we also continued to see strong momentum in our future markets, with revenue growth across Spark Health and IoT.
• Spark Health won new national contracts through the newly established Te Whatu Ora, or Health New Zealand, and launched its new cloud-based digital health platform, Kete Waiora.
• Spark IoT grew connections by 75% to 832,000 and we took a significant stake in our partner Adroit, to accelerate future growth in sustainable
monitoring solutions.
•In Sport we delivered a successful season of cricket and we remain focused on strategic partnerships to improve returns.
Ive done some analysis on this and I think this is what they mean…
Between spark and nz cricket we are slowly ruining the sport. Customers have no idea what games are on what provider at what time.
we have invested a lot of money on our platform and unfortunately have some contractual obligations to deliver
As soon as possible we will take sparksport out the back paddock and shoot it.
Capital return details finalised:
https://www.nzx.com/announcements/402249
Last trading day: 17 November 2022
Record Date: 21 November 2022
Trading resumes: 22 November 2022
Payment to Shareholders: 29 November 2022
Thanks buddy, much appreciated. It's going to be the best X-mas since the pandemic started! :)