SKT Sky Network Television Limited.

[jimdog31]

also, has Martin Stewart sold his 2,000,000 ? i cant see a notice

[mistaTea]

also, has Martin Stewart sold his 2,000,000 ? i cant see a notice

No market announcement is needed if MS sells his stock as he is no longer an insider.

[winner69]

Mistatea ....it was a guy john Maynard Keynes who said tjztbquote of yours

[mistaTea]

Mistatea ....it was a guy john Maynard Keynes who said tjztbquote of yours

Quite right! Thanks for the correction W69!

[flyer]

15.9c - RIP

[allfromacell]

I think it was Mark Twain who pointed out that the market can stay irrational longer than you can remain solvent.

It certainly feels that way with Sky TV sometimes!

At the previous AR, Sky had ~$120M cash. Subtract the $100M bonds and they were net cash $20M.

As of June 30 Sky was set to have produced FCF of ~$80M.

So the business probably has ~$100M of cash in the bank, and zero debt.

Quoted value is currently around $280M. If you subtract the cash position, the market is effectively saying that Sky’s operations are only worth $180M.

That is how severe the negative sentiment persists against Sky. It has not had any bearing to economic reality for a couple of years at least now.

So I am interested in the next AGM whereby management need to tell us how they are going to use the large cash position to transform the business in a way that will increase intrinsic value in an enduring way (in which case one would expect the market to reconsider its stance and lift quoted value).

The only reason I can think of is FCF is going to be very low over the next few years and perhaps never reach 50m+ again? They have flagged the 'new normal' programming cost base is going to eat into a lot of it as is the 'investment for growth'. Programming costs especially for sport will continue to increase.

[LaserEyeKiwi]

I think it was Mark Twain who pointed out that the market can stay irrational longer than you can remain solvent.

It certainly feels that way with Sky TV sometimes!

At the previous AR, Sky had ~$120M cash. Subtract the $100M bonds and they were net cash $20M.

As of June 30 Sky was set to have produced FCF of ~$80M.

So the business probably has ~$100M of cash in the bank, and zero debt.

Quoted value is currently around $280M. If you subtract the cash position, the market is effectively saying that Sky’s operations are only worth $180M.

That is how severe the negative sentiment persists against Sky. It has not had any bearing to economic reality for a couple of years at least now.

So I am interested in the next AGM whereby management need to tell us how they are going to use the large cash position to transform the business in a way that will increase intrinsic value in an enduring way (in which case one would expect the market to reconsider its stance and lift quoted value).

The company did say at investor day that "Positive free cash flow generation, but at low levels, for next few years as we absorb "new normal" programming cost base and invest for growth"

They didn't describe what "new normal" level was - but emphasised the past year had large positive one off gains from lower programming costs (thanks to covid), OSB sale etc, and expenses have stepped up going forward thanks to broadband launch etc.

It was there own fault for not providing actual dollar estimates - and I think the market has responded by interpreting "low levels of free cashflow for the next few years" as a business running close to breakeven, even as some forward projections are somewhat optimistic.

[mistaTea]

The company did say at investor day that "Positive free cash flow generation, but at low levels, for next few years as we absorb "new normal" programming cost base and invest for growth"

They didn't describe what "new normal" level was - but emphasised the past year had large positive one off gains from lower programming costs (thanks to covid), OSB sale etc, and expenses have stepped up going forward thanks to broadband launch etc.

It was there own fault for not providing actual dollar estimates - and I think the market has responded by interpreting "low levels of free cashflow for the next few years" as a business running close to breakeven, even as some forward projections are somewhat optimistic.

Well, EBITDA could fall all the way to $110M (a drop of $70M from where it is now) before Sky would no longer be cashflow positive (and this is using the higher end of the CAPEX band).

As it is, sky is projected to produce FCF of $70M in FY21 based on the ID presso.

So by June 2022 Sky will have $170M sitting in the bank (unless they buy something) and zero debt.

We don’t know what FCF will drop to after that…but even if it halves, that is still another $35M a year added to the bank while they push through their higher-than-normal CAPEX for growth costs.

And don’t forget, the CFO pointed out that Sky’s stay in business CAPEX is only about $10M- $15M a year.

[mistaTea]

https://www.nzherald.co.nz/business/...ZYRQSXFULYTRY/

Yeah we saw a real 'boost' today boys and girls!

https://media1.tenor.com/images/88a6...temid=15186318

If the price stays this low (or even better - drops further) I might not be able to help myself and scoop up some more...

I used to worry a bit about low market value for Sky because I thought it would increase the likelihood of an opportunistic takeover.

Definitely misplaced anxiety on my part for Sky - nobody wants to buy her thank God! And why would anyone? The Market thinks Sky will be bust in about 3 years or so...

So the further the SP drops the better (while I am still buying)

[mistaTea]

If management do surprise us with a divvy (and there really is absolutely no reason to expect one right now, given they have not said they are planning any kind of capital return...)

But if they did...well, we expect there to be ~$100M of cash in the bank as of June 30.

They could pay $70M in divvy (4c/share) and still have $30M kicking around.

If they did a buyback with that $70M instead they could buy back 437.5M shares at the current SP. The SP would go up if they started buying back but I reckon they could still grab 400M (about 23% of the shares outstanding).

If there is no takeover, and if they are not going to buy any of the assets that are for sale *cough* Vocus! *cough*... then what is left for them to do?

It would seem unconscionable for The Board to sit on $100M of shareholder funds if they aren't going to deploy it in a meaningful way - especially given the business is only 'worth' $280M right now.

I am not predicting a buyback or divvy now (as I say, the board has not given us any reason to expect one from the comments they have made).

But I am very interested to know what they will do with the funds.

And of course, the property sale...that has gone awfully quiet which probably does not bode well...but if a sale is still done, that could further bolster cash reserves by $20M maybe.

FY21 FCF is projected to be $70M based in the ID presso. So even if they return $70M now, by June 2022 they could be sitting on as much as $120M.

And ​zero debt!