Royal Mail from an investors POV - good or bad?
Discussion
Hello all.
I posted this thread - http://www.pistonheads.com/gassing/topic.asp?h=0&a...
Think I posted it in the wrong section as I have ended up with a load of arguments about first class postage and other such nonsense.
From an investors point of view, what are the negatives and positives?
Thanks in anticipation, Stuart.
I posted this thread - http://www.pistonheads.com/gassing/topic.asp?h=0&a...
Think I posted it in the wrong section as I have ended up with a load of arguments about first class postage and other such nonsense.
From an investors point of view, what are the negatives and positives?
Thanks in anticipation, Stuart.
Pints said:
Welshbeef said:
From the R4 and other news feeds I've read they seem to be thinking it is worth £3 billion as in the element which is to be privatised.
How many shares are they issuing?So what is the general feeling, worth a punt?
I was a reading an article that said unlike the privatisation of BT and others in the past, Royal Mail is not making too much money from the postal side and there is a lot of competition on the parcel side of things, so it is not a clear cut situation.
I was a reading an article that said unlike the privatisation of BT and others in the past, Royal Mail is not making too much money from the postal side and there is a lot of competition on the parcel side of things, so it is not a clear cut situation.
I haven't paid a great deal of attention to this yet, but it is far from coincidental that the figures used to value the company are based on the last year of trading, which benefited from a massive increase in the price of stamps.
Add in a militant unionised workforce - whom despite being given free shares, are still thinking like muppets instead of shareholders - and you have less certainty over future cashflow than competitors.
If I were to consider investing - which I may - I would have a good look at competitors first to understand the environment that RM will be operating in as this may not be the one-way bet that earlier privatisations have been.
My guess is that without government support, the company will struggle to compete on a level playing field / open market, and that value may be derived from reorganising logistics & selling off town-centre sorting offices etc for redevelopment, which it can only really do once!
Its clear that the government will have to price RM keenly to get rid of it, so there could be short-term gains to be made whilst it 'sells off the silver', but it doesn't feel like something to pop into your pension & leave there. Happy to be corrected though as I haven't researched this yet.
Add in a militant unionised workforce - whom despite being given free shares, are still thinking like muppets instead of shareholders - and you have less certainty over future cashflow than competitors.
If I were to consider investing - which I may - I would have a good look at competitors first to understand the environment that RM will be operating in as this may not be the one-way bet that earlier privatisations have been.
My guess is that without government support, the company will struggle to compete on a level playing field / open market, and that value may be derived from reorganising logistics & selling off town-centre sorting offices etc for redevelopment, which it can only really do once!
Its clear that the government will have to price RM keenly to get rid of it, so there could be short-term gains to be made whilst it 'sells off the silver', but it doesn't feel like something to pop into your pension & leave there. Happy to be corrected though as I haven't researched this yet.
Take a look at City link - Rentokil Initial bought this 5 odd years ago lost a fortune on it and couldn't get it to work. They sold it very recently.
Now Rentokil is a highly successful global company either they didn't know the industry or didn't spend enough time on it
Or maybe they couldn't get it to work as there isn't enough margin in it.
Will I invest? Hmm I guess dividends will be good but will I see any capital growth will there be a strike
Now Rentokil is a highly successful global company either they didn't know the industry or didn't spend enough time on it
Or maybe they couldn't get it to work as there isn't enough margin in it.
Will I invest? Hmm I guess dividends will be good but will I see any capital growth will there be a strike
Strikes are more than likely and the Union still has quite a bit of clout despite shafting your average postie repeatedly over the years.
Royal Mail have done everything possible to increase the share price but in 3 years they could be worth very little as all the free shares employees are getting can be sold, this coincides with the 3 year 'terms of employment' protection they are giving employees coming to an end.
Basically it means that whoever comes in can't change much for 3 years, but after that anything goes.
Royal Mail have done everything possible to increase the share price but in 3 years they could be worth very little as all the free shares employees are getting can be sold, this coincides with the 3 year 'terms of employment' protection they are giving employees coming to an end.
Basically it means that whoever comes in can't change much for 3 years, but after that anything goes.
More details are available today:
"Royal Mail's shares will be sold at a price of between 260 pence and 330 pence a share, valuing the widely revered service at between £2.6bn and £3.3bn."
And
"These risks are captured in the relatively high dividend yield or income to be paid by Royal Mail to its shareholders. At the proposed range in the sale price, Royal Mail shares would pay a dividend equivalent to between 6.1% and 7.7% of the offer price."
Source: http://www.bbc.co.uk/news/business-24295718
"Royal Mail's shares will be sold at a price of between 260 pence and 330 pence a share, valuing the widely revered service at between £2.6bn and £3.3bn."
And
"These risks are captured in the relatively high dividend yield or income to be paid by Royal Mail to its shareholders. At the proposed range in the sale price, Royal Mail shares would pay a dividend equivalent to between 6.1% and 7.7% of the offer price."
Source: http://www.bbc.co.uk/news/business-24295718
R1gtr said:
So what are you guys thinking?
As a Postie I will get some free shares and first refusal to buy more.
Unsure as to what my best move is.
I'm in same boat as you, do you really see the company making money?As a Postie I will get some free shares and first refusal to buy more.
Unsure as to what my best move is.
Letters are already sequenced, so maybe flats next but the growing market parcels can't be sequenced.
Once as much as possible is sequenced then what? the job is so labour intensive the only way to make more savings is to get rid of staff and the only way that's going to happen is if we move away from 6 day delivery's.
I honestly don't know mate, I am in two minds.
One side of me worries the share price will plummet over the 3 years and will drop further as everyone gets rid of the free shares.
The other part of me says play the long game and that after 3 years the business could be trimmed (bad for jobs, good for profit) and prices will rise as we make money.
The dividend if it really is 6-7% is hard to ignore.
One side of me worries the share price will plummet over the 3 years and will drop further as everyone gets rid of the free shares.
The other part of me says play the long game and that after 3 years the business could be trimmed (bad for jobs, good for profit) and prices will rise as we make money.
The dividend if it really is 6-7% is hard to ignore.
R1gtr said:
I honestly don't know mate, I am in two minds.
One side of me worries the share price will plummet over the 3 years and will drop further as everyone gets rid of the free shares.
The other part of me says play the long game and that after 3 years the business could be trimmed (bad for jobs, good for profit) and prices will rise as we make money.
The dividend if it really is 6-7% is hard to ignore.
Do you see this government scrapping the uso (or even milliband in a few years), if they refuse to change the 6 day delivery/everywhere how can we make money?One side of me worries the share price will plummet over the 3 years and will drop further as everyone gets rid of the free shares.
The other part of me says play the long game and that after 3 years the business could be trimmed (bad for jobs, good for profit) and prices will rise as we make money.
The dividend if it really is 6-7% is hard to ignore.
Scrap that and say in rural areas you only get post 3 times a week you could pretty much halve the rural staff as one postie would do 2 routes. As good as the shares may be there not as good as a full time job.
i'm interested to understand what the staff think of this? Is it a case of post workers being proud to work for RM or more a case of take a wage and go through the motions?
I ask because I think the future will hinge on the culture and outlook of the majority. It will be very easy for RM to float and fail. Making a good go of this will not be easy and require adjustment from within RM
I ask because I think the future will hinge on the culture and outlook of the majority. It will be very easy for RM to float and fail. Making a good go of this will not be easy and require adjustment from within RM
contractor said:
i'm interested to understand what the staff think of this? Is it a case of post workers being proud to work for RM or more a case of take a wage and go through the motions?
I ask because I think the future will hinge on the culture and outlook of the majority. It will be very easy for RM to float and fail. Making a good go of this will not be easy and require adjustment from within RM
What has happened in royal mail is money has been invested in machines that sort the letters into the order the delivery goes, postie then puts them into the delivery frame, then a4/parcels all need manually sorting a few times. I ask because I think the future will hinge on the culture and outlook of the majority. It will be very easy for RM to float and fail. Making a good go of this will not be easy and require adjustment from within RM
The plan was posties would be out the door quicker so could do bigger delivery's and staff could be cut ,this hasn't happened due to royal mail investing in machines that sort the product that's in decline- letters.
I think most places now staff work there hours and then break off and it's up to managers how they sort out getting the delivery done ( or not), some managers have found bullying staff works, others have found you back staff into a corner and they'll work to rule, do the 8 hours and no more.
I think staff are happy to work however the delivery's in no shape or form are doable within the hours royal mail say they should be done in, until the deliver's bear some resemblance to the real world it's not going to get better.
Re are staff proud, i've been a postie since 1990, now in a very tiny rural office and i enjoy it as you know a community on a 1st name basis, you see people born and you see people buried however if i was in a town/city and was moved from job to job week to week then it would be a case of just taking the money.
Edited by egor110 on Friday 27th September 15:43
Long term sinker IMO.
Bad business model. Letters will die.
Parcels can be delivered cheaper though other means more reliably.
Short term probably a good capital gain as shares rise. So buy for the IPO take the divi then cash out the gains IMO.
But Im not playing that speculative game. Ive burnt myself too often!
Bad business model. Letters will die.
Parcels can be delivered cheaper though other means more reliably.
Short term probably a good capital gain as shares rise. So buy for the IPO take the divi then cash out the gains IMO.
But Im not playing that speculative game. Ive burnt myself too often!
I would say morale is pretty low as a whole amongst the workforce and where as in the old days everyone would rally round and help out, I see more of a 'look after number one' attitude, brought about by recent changes.
Unless the 6 day USO is scrapped then I think the business will soon be in big trouble.
As a postie in a rural Scottish office it is worrying.
Think I will gamble and buy some.
Unless the 6 day USO is scrapped then I think the business will soon be in big trouble.
As a postie in a rural Scottish office it is worrying.
Think I will gamble and buy some.
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