Earnings guidance has been increased...perhaps an opportunity to reward shareholders earlier than anticipated...
Maybe 1c/share divvy as an early HY present with a promise of up to another 2c per share in the FY results if all goes well...
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After just preforming a capital raising which diluted shareholders substantially. How would that look.
It would look just fine if it significantly lifts the SP from where it is now.
They are planning to pay one in the second half of next year. This would just be an early present after lifting guidance.
Light at the end of the tunnel given the terrible year 2020 turned out to be for Sky, in terms of market valuation.
It’s the absolute maximum I think they would pay out.
CAPEX is estimated to be $45M. If you add in the bit of the depreciation charge that goes over and above the CAPEX spend you will arrive at underlying ‘Owner Earnings’ of $70M-$80M.
GAAP earnings significantly understates Sky’s real earning power.
So 3c per share divvy would be a touch over $50M payout - about 70% of the midway point estimate of Owner Earnings. The remaining $25M is retained earnings to continue investing.
They may not pay out 3c in total though - how much they pay out will be determined by underlying earnings as well as how much capital they need to retain for growth projects.
But a 70% payout ratio is not completely ridiculous either...the SP would increase significantly too I imagine.
A 1 cent payout would be equivalent to just over 5% to share price. So 2cents would be almost 12%. That would easily push the share price up to 30 cents but it still wont happen till the end of the year. It is nice to now being able to say end of the year and not next year.
Not to bang on about takeover conspiracy theories...
But I do actually agree that Sky is much more likely to be taken out in 2021 than it was last year.
Now that there is light at the end of the tunnel for COVID, there are a lot of cashed up institutions and funds looking for bargains.
Plus other companies like Discovery that have loads of money and access to cheap capital.
Even a low EBITDA multiple of 4 for Sky would be $600M or 35c/share.
For The Board to recommend anything, they have to justify the takeover offer based on reality (not just that the offer is x% above the last closing SP).
Anyway, this is not a prediction of a takeover as such - just pointing out that I think the odds of that happening have increased somewhat, and if it does happen - depending on how many interested parties there are I think shareholders will do just fine.
If and when sky announce a dividend it pushes up the share price regardless.
35 cents a share would be under selling it.