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SPICERS


Sector: Services

Industry:

The paper and printing specialist has got rid of its preference share baggage, has changed its board and management and is generating strong cash flow. Its stock trades at a 40% discount to its net tangible assets and almost half its valuation is cash. This looks to be great value.

WHY WE LIKE IT

The stock in the paper and print specialist is unloved and over looked but Spicers is producing positive cash flow. The balance sheet has been repaired to a large degree and a new board and management are focused on product lines and cost reduction. This stock trades at a 40% discount to its net tangible assets and is aggressively improving profitability. Management and the major shareholder, a Wall Street based hedge fund Coastal Capital are highly incentivised to generate big returns after a long-period of pain. It’s a high risk, hopefully high reward stock.

WHAT'S NEW

017 has been a huge year for Spicers, and its change of name from PaperlinX was the least of it. The group finally cleaned up its capital structure which had been a millstone around its neck and has a new board and management intent on aggressively cutting costs. The group issued 1.4bn shares to buy out the $285m worth of preference shares issued back in 2007. Now these “hybrid” holders own 68% of the expanded capital, and it delivers a New York hedge fund Coastal Capital a 14% stake. Here in Australia the two biggest paper distributors have merged, creating a big opportunity for Spicers to boost its sales in this struggling market. Last, the group’s FY17 result shows that this company can produce substantial cash flow relative to its market cap, having reported cash inflows of $6.3m versus an outflow of $13.7m in the prior year.

 

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  • Radar Rating Unlock
  • Market Cap ($m)* 0
  • Dividend Yield (%)* #DIV/0!
  • NET CASH ($M) 39
  • * Data as of 24 July 2019

Latest Research Summary

SPICERS: RESEARCH TIP UPDATES - JULY 2019
10 Jul, 2019

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Previous Research

Research Date Radar Rating  
SPICERS: RESEARCH TIP UPDATES - JULY 2019 10 Jul, 2019 905c7ca6 View Research
SPICERS: RESEARCH TIP UPDATES - JANUARY 2019 23 Jan, 2019 b46c96ab View Research
SPICERS: RESEARCH TIP UPDATES - November 2018 21 Nov, 2018 e016509e View Research
SPICERS: THE DIVIDEND REPORT - OCTOBER 2018 17 Oct, 2018 a960f54c View Research
SPICERS LTD: RESEARCH TIP UPDATES - OCTOBER 2018 02 Oct, 2018 c82c170d View Research
SPICERS LTD: FY18 REPORTING SEASON - AUGUST 2018 29 Aug, 2018 ca97f521 View Research
SPICERS: NEW STOCK UPDATES - JUNE 2018 27 Jun, 2018 ac94a1a8 View Research
SPICERS: RESEARCH TIP UPDATES - MAY 2018 22 May, 2018 be8a038f View Research
SPICERS: RESEARCH TIP UPDATES - MARCH 2018 29 Mar, 2018 fbb887e0 View Research
SPICERS: RESEARCH TIP - NOVEMBER 2017 30 Nov, 2017 a7775c3f View Research