SKT Sky Network Television Limited.

[mistaTea]

Oh god. Takeover talks back.
No divi In the half year.
We will have to wait for the full year.
Announcing a divi or future divi would immediately double the share price similar to NZME

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...

[Dlownz]

After just preforming a capital raising which diluted shareholders substantially. How would that look.

[mistaTea]

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.

[jimdog31]

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...

Keep talking dirty to me.... is 3c total divvy a stab in the dark or based on what % of the earnings guidance ?

[mistaTea]

Keep talking dirty to me.... is 3c total divvy a stab in the dark or based on what % of the earnings guidance ?

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.

[Dlownz]

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.

[mistaTea]

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.

And 2 cents is probably more realistic as they do have to continue to be prudent with their capital management...

[mistaTea]

DJ New Zealand Companies Could Be Ripe for Takeovers in 2021 -- Market Talk
17 Dec 2020 10:50:03
2350 GMT - Takeover offers for New Zealand's listed companies could increase in 2021 after only two transactions this year, says Forsyth Barr, citing cheap debt, cashed-up private equity players and greater tolerance for risk among sovereign wealth funds. The brokerage has identified 20 companies that it sees as the most likely targets and a top-10 subset includes locally well-known names such as a2 Milk, Infratil and Kathmandu as well as struggling Gentrack and Sky Network Television. Several companies also have opportunities to sell noncore businesses or to sell and leaseback assets, Forsyth Barr says. That includes telco Spark, which could sell and leaseback infrastructure such as data centres, cell towers, and telco exchanges. (stephen.wright@wsj.com)
(END) Dow Jones Newswires
December 16, 2020 18:50 ET (23:50 GMT

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.

[Dlownz]

If and when sky announce a dividend it pushes up the share price regardless.
35 cents a share would be under selling it.

[mistaTea]

If and when sky announce a dividend it pushes up the share price regardless.
35 cents a share would be under selling it.

I agree with you.

35c would be the absolute lowest the board could even consider recommending in my view.

I am not convinced that 35c would get enough support from shareholders, but it could be a starting point to put the business ‘in play’.