SJR.B - Shaw Communications

[Viking]

For those looking for something with a decent yield and decent growth prospects: SJR.B

 

Great Company Update: www.shaw.ca/NR/rdonlyres/9A314409-F8E2-47C2-922A-F09C7E960510/0/InvestorUpdateNovember2010Final.pdf

 

They report Q1 results later this week (fiscal year ends Aug 30).

SJR.B = $20.25

RBC 2011 estimate = $1.49 ($1.23 earned in 2010)

2011 PE = 13.6 (not dirt cheap but good historic entry point for Shaw)

Div = $0.88 = 4.3% (likely will be increased in coming months by another 5% to 8%)

 

Will start reporting Global purchase with Q1 results. My guess is we will see in the coming years that they got an absolute steal with this deal (they own media assets - Corus I think - and understand this model very well). Upside from this business should help ensure 2011 results are good.

 

Analysts seem focussed solely on what they are doing with their wireless launch (the head of which recently resigned). And the stock is down almost 15% since October. And, yes, Jim Shaw recently stepped down as CEO (Brad, his brother, is now running things) - Jim and dad JR are still heavily involved. Lots of moving parts.

 

I like current valuation (fair), great dividend while you wait. Global to help earnings in 2011 and wireless should help earnings in 2012. I view this holding as a quasi-bond type holding (with potential to deliver a 12 to 15% annual return the next few years).  

[roundball100]

Viking - thanks for the post.  The slide deck on SJR.B looks pretty good, though of course such slide decks rarely dwell on the negative.  Nonetheless, I am now tracking SJR.B and considering.    Another in the same space though much smaller is Cogeco.    Rogers seems to have a lower payout ratio than the other Cdn telecom service providers and still a quite decent dividend, as well as having fallen off in price recently.  Given the way kids seem to do nothing but use smartphones these days and the interest in tablets, I am wondering if the future for the Cdn service providers might not be too bad. 

[Viking]

Shaw posts Q1 results tomorrow morning. I will be looking:

1.) to see if Telus is taking any TV customers away

2.) how the financials for Canwest look (first period they will be included in results)

3.) update on wireless (still expecting late 2011 launch)

4.) update on dividend increase

 

Also, for those interested in an overview of the new wireless players, here is a good article from G&M: www.theglobeandmail.com/report-on-business/rob-magazine/revenge-of-the-scallywags/article1814198/page1/

[roundball100]

... Div = $0.88 = 4.3% (likely will be increased in coming months by another 5% to 8%)

Viking - you got your 5% dividend boost today.  Cellular roll-out delayed 3 months (perhaps not unexpected).  Loss in cable subscribers to Telus greater than analyst's consensus.  Overall, the quarterly report looked not too bad, while acknowledging stiff competition ahead.

 

http://www.theglobeandmail.com/globe-investor/news-sources/?data-ipsquote-timestamp=20110113&archive=ccnm&slug=201101130666138001

 

[KFRCanuk]

I find it interesting that most of shaw's customer provisioning is down. We are a shaw pri customer and have no phone service at two of our branches.

 

I wonder what they are going to offer customers that haven't had phone service for most of this week.

 

Oh and there are basically no way to contact them cuz their corporate email and phone systems are down too.

 

Stock price didn't take a hit yet which is fascinating to me.

[alpha]

 

This was one of my largest holdings. Now I am trying to decide whether to sell while the market price is high and before any potential regulatory rulings are handed down on the merger or wait it out. I suspect there is a chance regulators would limit sale to cable assets only, but today's media coverage seemed pretty bullish on a total buyout.

 

Anyone follow the sector and have any thoughts?

 

 

Cheers

[bizaro86]

 

This was one of my largest holdings. Now I am trying to decide whether to sell while the market price is high and before any potential regulatory rulings are handed down on the merger or wait it out. I suspect there is a chance regulators would limit sale to cable assets only, but today's media coverage seemed pretty bullish on a total buyout.

 

Anyone follow the sector and have any thoughts?

 

 

Cheers

 

I didn't own this previously, but bought a bit today for the merger arb spread. From a consumer perspective this would absolutely be an unpopular merger. But the cable assets don't overlap at all, so there doesn't seem to be any justification to not merge them. The wireless obviously does, but I bet they'd be willing to spin-out or sell at least some of that to get the deal done. The "new entrant" spectrum that Shaw has is a potential issue, as Rogers obviously isn't a new entrant. But I suspect they get this across the line somehow.

 

I was surprised at how much cash was in the deal. It's all cash for outside shareholders, with stock offered to the Shaw family (continuing their grand tradition of giving themselves a better deal than outside shareholders). Rogers trying to follow the "lever up to grow" strategy from the US operators I guess.