RMG LN
Royal Mail PLC
Consumer, Industrial/Transportation
10/06/2016
Presented
| Date | 10/03/2016 |
| Price | £4.92 |
| Market Cap | $7.59B |
| Ent Value | $7.71B |
| P/E Ratio | 22.86x |
| Book Value | £4.46 |
| Div Yield | 0.06% |
| Shares O/S | 0.00M |
| Ave Daily Vol | 2,353,925 |
| Short Int | N/A |
Current
| Price | £3.43 |
| Market Cap | $5.04B |
| Royal Mail Plc is a provider of postal and delivery services in the UK, with significant operations in continental Europe. The company operates through its business segments: UKPIL (UK Parcels, International and Letters), General Logistics Systems GLS and Other. The UKPIL segment collects and delivers parcels and letters predominantly through its networks: the Royal Mail Core Network and Parcelforce Worldwide. It provides collection and delivery services under the Royal Mail and Parcelforce Worldwide brands. GLS comprises the group's European parcel business and is focused on the deferred parcels segment. GLS operates in 22 European countries and nation states through wholly-owned members of the GLS Group and franchisees, and covers an additional 15 European countries and nation states through network and service partners of the GLS Group, which include Parcelforce Worldwide in the UK. Royal Mail was founded on September 6, 2013 and is headquartered in London, the United Kingdom. |
Publicly traded companies mentioned herein: Amazon.com Inc (AMZN), Deutsche Post AG (DPW GR), Morgan Stanley (MS), Royal Mail PLC (RNG LN), UK Mail Group PLC (UKM LN)
Highlights
Royal Mail PLC (RMG) is the logistics portion of the United Kingdom’s mail service. It was privatized in 2013, and the government (which still owns the actual post offices) sold the remainder of its stake in October 2015. The presenter said that he has been short the stock “on and off” multiple times over the last two years and he is presently short at ~490 GBp because both the timing and risk/ reward appear to be favorable. There is a looming risk of a strike over RMG’s pension obligation if negotiations with its labor union falter and competition is increasing. The letters business (60% of UKPIL revenue) is in secular decline, and while parcels (the other 40% of UKPIL revenue) has a better growth profile, customer retention can be an issue and Amazon is looking to expand its UK presence. With relatively poor FCF conversion and RMG’s cost structure growing as a result of its wage contracts the presenter sees Fiscal 2018 earnings coming in 25% below Street estimates of ~0.40 GBP. This would result in ~33% downside if an 11x multiple is applied.
◆Signing up and creating account with us unlocks this content for you. Contact us today for full access to DeMatteo Research and more.
◆Signing up and creating account with us unlocks this content for you. Contact us today for full access to DeMatteo Research and more.