I am interested to hear any opinions about the proposed Royal Mail floatation. Will it remain a croc and sink or will it open at a premium and fly?

The market seems to like the new numbers !!

goldmansachs said float 6bn short making s/p @ £ 9

28 Mar 2014 Royal Mail Plc RMG RBC Capital Markets Outperform 596.50 564.00 625.00 650.00 Upgrades

UPGRADES to SP TARGET of 650p

From City Wire 27/03/2014.......

Royal Mail still a buy after redundancy news
News of 1,300 redundancies has not dampened Shore Capital’s enthusiasm for Royal Mail (RMG.L) as it maintained its ‘buy’ recommendation.

Robin Speakman said the redundancies, which fall under the group’s efficiency programme, will not make a significant change to his forecasts.

‘An addition of around £100 million cost is to be taken in the current year to March 2014, resulting in total transformation costs this year of approximately £230 million; annual cost savings are put at around £50 million post full year 2015, with approximately £25 million achievable next year,’ he said. ‘This goes some way to ameliorating additional pension costs of around £75 million per annum from next year.’

He added that the staff leaving were ‘mid-tier management and back office support’ rather than front line staff.

‘We believe that the context of these additional redundancies should be noted, being amongst a total UK core network of some 140,000 staff and against a competitive background, and a long term pay agreement with the Communications Workers Union. We do not expect to make any significant changes to our forecast from this news and retain a “buy” stance.’

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Royal Mail upgraded by RBC Capital
28th March 2014, 08:34

Equity research analysts at RBC Capital Markets have upgraded their recommendation on Royal Mail Group [LON:RMG] to ‘outperform’ from ‘sector perform’ but stated that investors need to be selective in terms of timing.

The broker pointed out that the shares currently trade at a 25 per cent discount, on a PER basis, to sector peers and has increased its price target to 650 pence per share (previously 625 pence), suggesting around 18 per cent potential upside at current levels.

The broker said: “We see RMG shares becalmed by short-term adverse EPS momentum and investor concern about the overhang from the 29.8% UK Government stake that potentially comes out of lockup in April.

“Following placing discounts for Lloyds (UK Government sale in March, 2014), and discounted offerings in the sector that have offered entry opportunities (bpost, TNT Express in H2-2013), we see investors now waiting to exploit this potential.”

04 Apr 2014 Royal Mail Plc RMG Deutsche Bank Hold 552.00 550.50 - 587.00 Initiates/Starts

SP TARGET 587p

Berenberg Buy 560.00 560.00 - 700.00 Initiates/Starts

Royal Mail to pilot Sunday service for parcel deliveries

Royal Mail to pilot Sunday service for parcel deliveries

Final results tomorrow - Thursday 22nd.

Preliminary Results

Revenue and volume

· Group revenue increased by two per cent, due to parcel revenue growth in both UKPIL and GLS. Parcels are the largest contributor to Group revenue, accounting for 51 per cent.
· UKPIL revenue was £7,787 million, up two per cent. UKPIL parcel revenue increased by seven per cent. As expected, parcel volumes (1,068 million items) were flat compared with 2012-13.
· UKPIL letter revenue (including marketing mail) declined to £4,625 million, a two per cent reduction. The four per cent decline in addressed letter volumes for the full year was at the better end of our forecast range of four to six per cent per annum. Marketing mail revenue, part of letter revenue, was £1,111 million.
· GLS revenue was £1,651 million, up seven per cent. Volumes increased six per cent, with growth in both domestic and international volumes.

Profit and margins
· Group operating profit before transformation costs grew to £671 million.
· Transformation costs of £241 million for the year include a provision of £104 million in relation to the management reorganisation programme, announced on 25 March 2014, which will be implemented in 2014-15.
· Group operating profit after transformation costs increased to £430 million. The operating profit margin reduced from 4.4 per cent to 4.2 per cent, as a result of the provision for the management reorganisation programme.
· UKPIL generated operating profit after transformation costs of £309 million. The operating profit margin decreased from 3.9 per cent to 3.5 per cent, again as a result of the provision for the management reorganisation programme.
· GLS operating profit was £108 million. The operating profit margin decreased from 6.7 per cent to 6.5 per cent due to the full year effect of further increases in sub-contractor rates in Germany.
· Profit before taxation (excluding specific items) of £363 million reflects the trading performance of the Group. Accounting standards require us to include a one-time, non-cash benefit of £1,350 million as a result of the Pensions Reform in reported profit before taxation and reported notional earnings per share.

Notional earnings per share (EPS)
· Notional EPS excluding specific items was 26.3 pence.
Cash flow and balance sheet
· EBITDA before transformation costs grew to £942 million, due to improved trading performance.
· Net cash investment of £581 million represents £617 million investment after cash from asset disposals of £36 million.
· Free cash flow increased to £398 million. This has driven a reduction in net debt to £555 million.

Dividends
· As previously indicated, the Board has recommended a final dividend of 13.3 pence per share, subject to shareholder approval at the Annual General Meeting, to be held on 24 July 2014.

Transformation and cost control
· Collections, processing and delivery productivity improved by 1.7 per cent, as we reduced the number of frontline hours at a faster rate than the reduction in the level of workload.
· Eight Mail Centres closed this financial year, taking the total number of Mail Centres remaining to 40. We have completed or commenced modernisation in 94 per cent of our Delivery Offices.
· Tight cost control meant non-people costs in UKPIL reduced by three per cent.

Regulation
· The Ofcom investigation into changes to access5 pricing puts this commercial response to changing market conditions on hold.
· Based on our estimates of the impact of TNT Post UK's publicly-stated plans, direct delivery could reduce Royal Mail revenue by over £200 million in 2017-18. See regulation section of Chief Executive's Review for more information.
· With our proposed access price changes suspended and unfettered direct delivery rollout, there is a reasonable prospect that Ofcom's indicative EBIT margin range of between five and ten per cent for Royal Mail's reported business may never sustainably be achieved.
· We are preparing a regulatory submission calling on Ofcom to take action now and carry out a full review of direct delivery.

Summary outlook
· We are facing increasing challenges in the parcels and letters markets in the UK. However, our key value drivers of single digit revenue growth, margin expansion and underlying free cash flow growth remain the objectives for the Group for 2014-15.
· The Board's intention remains to pursue a progressive dividend policy, having regard to the normalised earnings progression of the Group.

Take your pick - double take on Barclays..

Barclays Capital Equal weight 516.00 - 925.00 Reiterates

Barclays Capital Equal weight 516.00 - - Reiterates

Espirito Santo Execution Noble Neutral 516.00 560.00 505.00 Retains

Credit Suisse Underperform 516.00 460.00 460.00 Reiterates

JP Morgan Cazenove Overweight 516.00 765.00 765.00 Reiterates

Beaufort Securities Hold 516.00 - - Reiterates

Deutsche Bank Hold 516.00 587.00 587.00 Initiates/Starts

Citigroup Neutral 516.00 531.00 531.00 Upgrades

Berenberg Buy 513.75 519.00 700.00 700.00 Reiterates

Ex divi wed 2nd July 2014 (13.3p)

Credit Suisse note today:
"TP cut to 360p, no near term positive catalysts: We now model a 30pbs margin improvement for 2015E, down from 100bps and against RMG guidance of 50bps. We cut our 2015-16-17E EPS by 16%-17%-14% respectively and see consensus as too high. We sit 15% below a 2015E EBIT consensus of £495m (BBG) for 2015E.
Weak parcels compounding the competitive threat in mail: We see risk to 2015 guidance premised on (i) overcapacity in the UK parcels market which we think will take time to adjust, impacting volumes and pricing; (ii) FX headwinds persisting in 2Q (at least) driving continued weakness in international parcels; (iii) a further 20bps YoY margin contraction at GLS from sustained cost pressures (France/Germany), additional capacity (Germany) and tougher revenue comps (Italy); (iv) well flagged competitive pressures in mail from TNT Post UK which have yet to materialise and; (v) high fixed costs and a heavily unionised workforce which limit cost saving initiatives that may be needed in a lower revenue environment this year. Crucially, pressures in the parcels market increases the risk that mail volume declines will not be offset requiring potentially deeper restructuring initiatives.
These would have clear near term cash implications from additional Transformation costs. Our bear case scenario outlined in this note generates a FV of 270p.
Valuation: Our TP of 360p is based on a blend of our DCF (350p), SOTP (360p) and multiples analysis (370p). RMG trades on a 2015E EV/EBITDA of 6.6x for a 6.3% FCF yield representing a 5% and 11% discount to peers for a stock with materially more risk to cash flows in our view."

not looking so underpriced now is it, after all the blather and hullaballoo at launch

Thats because Camorons mates and spivs have cashed in.

any more crappy excuses from your quarter?
it's called making the theory fit the facts :-)

I am getting interested in this one again after the carpet bagging.

UBS note today:
"Last week, we had negative trading statements from both TNT Express and UK Mail. Although it is dangerous to extrapolate too much, the commentary on weak UK parcel volumes (UK Mail) and adverse pan-European trading (TNT Express) are clearly not positive for Royal Mail. Due to this we have cut RMG’s UK parcel FY2014 volume growth forecast from 2.5% to 2%, implying 1% growth in H1, followed by 3% in H2. GLS performance likely to be less impacted.
We have also reassessed GLS’s performance given the newsflow but the largest change has been to the rate we translate euro earnings, given recent moves. We now assume € per £ of 1.26 this year and 1.27 thereafter. We believe that flat EBIT margins at GLS are perhaps a better reflection of the kind of performance we can expect in the current economic environment in continental Europe.
A lot of challenges face Royal Mail but share price is largely discounting this RMG faces a number of challenges, including modernising its network, managing the decline in letter mail volumes, the threat from competition in both letter and parcel, as well as dealing with a highly fixed cost base. We believe RMG faces particular issues with having a highly unionised, relatively well paid workforce at a time when its revenue visibility is low and when both the letter and parcel markets are undergoing significant change. Having said all this we believe the poor share price performance and valuation largely reflect the fact these negatives are known by the market.
Valuation: EPS estimates cut by 6-8%; Rating raised to Neutral, PT cut to 400p. We have cut our EPS estimates by 6-8% going forward, given the weakness in UK parcel as well as updated FX forecasts. We note that our underlying improvement in margins is now 5pp, in-line with company guidance. RMG trades on 5.3x CY2015 EBITDA, 12.3x P/E versus peers on 3-8x and 7-16x. However, we regard RMG as more of a work in progress than the likes of Austrian Post, bpost, and Deutsche Post. We have cut our DCF-based price target to 400p."

so this was floated at about 330 from memory, and then there was a massive ballyhoo that it had been disgustingly underpriced
12 months later, reality has set in and the price is barely 400, what do we hear?
was that a deafening silence?