Smiths News - Refinancing releases dividend shackles

Smith News’ H124 results highlighted the robustness of the underlying business, but also revealed the success that management is achieving in creating long-term shareholder value. For example, 74% of revenue is now contracted until 2029, the recent refinancing saves costs and removes the dividend restriction, and the organic growth initiatives are gaining significant momentum. Furthermore, the revised capital allocation policy raises the possibility that modest, self-funded M&A could add further scope to the growth initiatives. Our revenue and profit forecasts are broadly unchanged, but dividends are materially raised. Our valuation is edged up to 90p.