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08-03-2019, 10:03 AM
#1181
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08-03-2019, 12:26 PM
#1182
Morning Star make the point that SKT still has deep pockets and a sound balance sheet. Their valuation model allows for declining dividends and strongly decreasing earnings through to 2020 but with predicted PE of 5.6 and yield of 10.0 (2019) and PE of 6.7 and yield of 8.5 (2020) I do not think they are being silly with their recommendation. With a net margin over 14% (and up on the previous year) and net debt to equity of 22.5 this company still has value at today's SP.
Of course there is risk. You would not be in the market otherwise. However, I remember when the SPK SP (as Telecom) reached $1.50 not too many years ago and all was doom and gloom.
With SPK's increasing strength in media, the Commerce Commission may have a different opinion going forward and it may even be possible that the Vodafone merger plan is resurrected.
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09-03-2019, 09:06 PM
#1183
Just posted on the other forum, but I thought that I would share here as well.
Had a bit of time tonight so decided to look into SKT but not at a FA or TA level (as we all should be able to identify a decaying company in a solid down trend – even if Kiltearn Partners can’t), instead I’m looking at the ‘Troughing’ level and from what I’ve seen this company is up with the best in the NZX.
So, I’ll start at the top with John (Managing Director/CEO), Total Remuneration in 2018 of $1.95m incl short and long term bonuses of $562k.
Over the last 5 years his Remuneration has been between $1.8m and $2m, while the Share price has dropped approx. 80%. I’m unsure of the exact hurdle levels that he must achieve to get his bonuses, the categories are listed in the latest Annual Report but none of them are on the total shareholder return or EPS growth (which works well for him)
He’s been in the role for 17 years and is probably looking to clip the tick until the lights finally get turned out.
The Board – Well the board fees range from $100k to $187k (chairman & on committees) for….wait for it……….7 board meetings a year! That’s right, just 7 per year and possibly 8 days of work if the directors decide to attend the AGM . Sweet gig, no wonder why Derek is loving SKT and last year received $146k for rocking up. SKT have omitted the number of board meetings from the last 4 Annual Reports, but up to 2014 they did, and that number was 7 (hmm that’s when the share price was last at a high as well).
The board doesn’t really believe in the company as they have no real skin in the game. John holds a few and has doubled his holding to 240k in the last couple of years, but even the Titanic’s captain thought the ship wouldn’t sink until it did. 26 years in the company and only 240k shares tells me that he’s smart enough to know that getting your snout in the tough with only a part time board to monitor you is a lot more rewarding than owning shares in the company.
If I was a shareholder, I would be asking some serious questions at the AGM, as I think the cast from 7 days would provide shareholders with more value than this current board.
Disc: Don’t hold and never have, might consider buying 1 share to attend what should be an interesting AGM later this year (Even including brokerage it would be cheaper than seeing Elton and you’ll get a snack).
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09-03-2019, 11:39 PM
#1184
Member
Originally Posted by McGinty
Just posted on the other forum, but I thought that I would share here as well.Had a bit of time tonight so decided to look into SKT but not at a FA or TA level (as we all should be able to identify a decaying company in a solid down trend – even if Kiltearn Partners can’t), instead I’m looking at the ‘Troughing’ level and from what I’ve seen this company is up with the best in the NZX.So, I’ll start at the top with John (Managing Director/CEO), Total Remuneration in 2018 of $1.95m incl short and long term bonuses of $562k.Over the last 5 years his Remuneration has been between $1.8m and $2m, while the Share price has dropped approx. 80%. I’m unsure of the exact hurdle levels that he must achieve to get his bonuses, the categories are listed in the latest Annual Report but none of them are on the total shareholder return or EPS growth (which works well for him)He’s been in the role for 17 years and is probably looking to clip the tick until the lights finally get turned out.The Board – Well the board fees range from $100k to $187k (chairman & on committees) for….wait for it……….7 board meetings a year! That’s right, just 7 per year and possibly 8 days of work if the directors decide to attend the AGM . Sweet gig, no wonder why Derek is loving SKT and last year received $146k for rocking up. SKT have omitted the number of board meetings from the last 4 Annual Reports, but up to 2014 they did, and that number was 7 (hmm that’s when the share price was last at a high as well).The board doesn’t really believe in the company as they have no real skin in the game. John holds a few and has doubled his holding to 240k in the last couple of years, but even the Titanic’s captain thought the ship wouldn’t sink until it did. 26 years in the company and only 240k shares tells me that he’s smart enough to know that getting your snout in the tough with only a part time board to monitor you is a lot more rewarding than owning shares in the company.If I was a shareholder, I would be asking some serious questions at the AGM, as I think the cast from 7 days would provide shareholders with more value than this current board.Disc: Don’t hold and never have, might consider buying 1 share to attend what should be an interesting AGM later this year (Even including brokerage it would be cheaper than seeing Elton and you’ll get a snack).
Fair points about John Fellet and the Board, but John's out and there's a new CEO: https://stoppress.co.nz/movingsshaki...tewart-new-ceo
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10-03-2019, 10:55 AM
#1185
Originally Posted by Airw0lf
Thanks for the update, It will be interesting to see what level of compensation the new CEO will be on.
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10-03-2019, 11:09 AM
#1186
Originally Posted by McGinty
Thanks for the update, It will be interesting to see what level of compensation the new CEO will be on.
Notice period 6 months by either party
Post-Employment Restraint 6 months
Base salary NZ$1.5 million pa
Short Term/Long Term Incentive Annual on target STI/LTI incentive of 50% of base salary, at the discretion of the Board
Share scheme 200,000 SKY shares to be provided for no consideration on the first four anniversaries of commencement of employment (total 800,000 shares). The shares will vest if the company exercises its no fault termination right or if there is a change of control and Mr Stewart is no longer CEO.
Post termination entitlements These include a mix of remuneration for a limited period, statutory entitlements and relocation costs which vary depending on how the appointment comes to an end.
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11-03-2019, 07:14 AM
#1187
Originally Posted by McGinty
The board doesn’t really believe in the company as they have no real skin in the game. John holds a few and has doubled his holding to 240k in the last couple of years, but even the Titanic’s captain thought the ship wouldn’t sink until it did. 26 years in the company and only 240k shares tells me that he’s smart enough to know that getting your snout in the tough with only a part time board to monitor you is a lot more rewarding than owning shares in the company.
Great points McGinty. It is certainly much better when Management buy shares in the company with their own money - so that they 'eat their own cooking', as it were.
As it happens, Cathryn Oliver did pick up a few shares recently (https://www.nzx.com/announcements/331665). Perhaps there will be more disclosures if more Management take advantage of the low share price.
Though I much prefer Management to have significant skin in the game (creating Owner-Managers - my kind of people!), I don't think it is possible to leap to the conclusion that low levels of ownership must mean that Management think the company is doomed to fail.
In the case of Sky, shares owned by Management have been low for some time. Even when the Vodafone-Sky merger looked like it would go through, Management weren't exactly snapping up shares even though the combined new entity would have certainly been worth more over time.
This might be because Management are not well versed in stock picking. Perhaps if they read Peter Lynch's 'One Up on Wall Street' they would realise that buying stocks in companies you know really well (i.e work for...) can be a winning strategy. Not being confident in picking your own stocks does not necessarily mean you are not passionate and optimistic about the future of the company.
Others may also be wary of putting all of their family eggs in one basket. A (potentially irrational) need to diversify their investments may keep them away from buying into Sky, even though they know there is value.
I would be much more worried if Management had significant holdings and were dumping the stock in a race to the exit.
Last edited by mistaTea; 11-03-2019 at 07:21 AM.
Reason: added missing word
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11-03-2019, 09:16 AM
#1188
Originally Posted by Balance
There is a very strong case for directors and management to own shares so they will work to ensure the company's success and FUTURE success. How else does one know that the interests of directors & management are aligned with that of shareholders?
I agree with you 100%. Owner-Managers are preferred.
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11-03-2019, 10:55 AM
#1189
Last edited by see weed; 11-03-2019 at 04:23 PM.
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11-03-2019, 11:12 AM
#1190
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