Smiths News - Contract renewals cement future cash flows

Smiths News announced yesterday that it has secured its fifth major publisher contract renewal with News UK & Ireland, publisher of The Sun, The Times and The Sunday Times. This follows new five-year agreements with Associated Newspapers, Telegraph Media Group (TMG), Frontline and Seymour Distribution, which collectively account for 65% of current newspaper and magazine revenues. We expect additional contract renewals to be secured in the next year. These renewals bolster the company’s cash-generative business model, providing a steady stream of revenue up to 2029/30. Our valuation remains unchanged at 89p, representing 78% upside to the current share price.