Carillion Share Discussion Threads

[kcsham] 22/2/2017 12:46

Stroder - don't start this again because it had been discussed before. In a long and tedious way. Of course, I can't stop you if insist.Good luck to you.

[shroder] 22/2/2017 11:26

The short side catches everyone's attention due to the percentage size, however how many of the shorts are un-hedged?

I ask this as traditional hedge funds are generally considered to be 'hedged' or market neutral hence the name.

looking very briefly at another stock, I picked out AQR to try and see what their motivation might be, one of their funds can be seen here:



"The Fund is designed to be market neutral, targeting a portfolio beta to equity markets of zero over a normal business cycle. We construct the portfolio based on our global security selection and asset allocation models, employing the following indicators:"

What I would like to establish is how they go about off setting short positions, are they trading pairs for example or other instruments to balance things out?

Not sure if AQR are short of CLLN but they do pop up regularly on other stocks either short or in arbs.

[kcsham] 22/2/2017 11:08

WJ - looking at narrow spread of today's trading, I believe the shorters' chance to continue to short this share is limited, their shorting operating will reverse to buying back soon. Carillion will report its result in just over a week, if the shorters try hard now and the share price is not going to fall as they expected, then the buying back will happen in the next few days. I do not believe they will take such a big risk while they are still in big profit. I am really interested to see the end game.

[w1ndjammer] 22/2/2017 09:48

at this price its a gift, but how low can it go. still waiting to buy my last 50%
but need to sell BKG first, and that one has come back a little bit from its high.

might give it another week.

Guess there is a whole raft of peeps thinking the same thing..........

WJ.

[m4rtinu] 22/2/2017 09:48

I often think (and indeed may have suggested) that Carillion get into (social housing) house building.

[kcsham] 22/2/2017 09:17

kiwihope - what a intelligent fellow! What you said is spot on.

[kcsham] 22/2/2017 09:15

I had been working in the construction industry for decades, on sites and in offices, design, tendering and construction, before my retirement. When I was working in the estimating department of an international construction company, sometimes we tendered projects with a negative margin and relied on claims on alteration works to get a 2 to 3% profit at the end. It is a jungle out there.That is why I hardly invested in a construction company. Over the years, a lot of construction companies turned to house building, property management, support services and asset investment ......or disappeared.Carillion attracts my attention because they are expanding its support services business with a good margin and concentrated on good quality construction projects. After all, Carillion is a company with solid fundamentals for my investment. All IMHO.

[kiwihope] 22/2/2017 09:04

spoole5,

If Carillion business is OK and they make no mistakes then the shorters will not succeed in the long term. As I've said before, there is far too much emphasis on this. Shorters are just sellers. They are speculative sellers but still just sellers. They have no mystical powers ... A shorter shorting 1M shares is no different to a large holder selling 1M shares.

What is important is Carillion sales, profits, debt, cashflow, etc. That is what we should be talking about, not all this tattle about shorters and how they are going to ruin our company.

[bookbroker] 22/2/2017 08:46

Servo, Interserve, Capita, they all tell their stories, this whole sector is riddled with unforeseen events, not sure if this sector is really that investable, when cos. are all tendering with skinny margins, it's difficult to figure out how many of these contracts are actually worth bidding upon, but then you might say that any business is like that unless you have a unique proposition that is difficult to replicate, and that really only consists of the 'BRAND'!

[kcsham] 22/2/2017 08:42

A lot of sell this morning, but the bid-offer spread is getting very narrow. If this continues, I am not sure if the shorters will be interested to continue their operation while considering the risk/benefit factor.

[m4rtinu] 21/2/2017 15:49

Speeds - thanks for posting that.

[jaf1948] 21/2/2017 15:17

The thread is getting quieter as there is nothing new to say at the moment. I'm sure after the March 1st results, it will become noisy again !

[rcturner2] 21/2/2017 15:10

the thread is getting quieter on the buyside too

[spoole5] 21/2/2017 14:46

I get the feeling that whatever the results hold the shorters will force this below 2 quid. Not enough buyer support to stop it.

[speedsgh] 21/2/2017 14:36

The following is the same comparison except with Middle East construction stripped out of CLLN's figures.

CARILLION
Total revenue: £4,586.9m
Construction revenue (excl Middle East): £1,258.3m
Construction (excl Middle East) as % of Total revenue: 27.4%

Total underlying operating profit: £259.0m
Construction underlying operating profit (excl Middle East): £37.8m
Construction (excl Middle East) as % of Total underlying operating profit: 14.6%

Total underlying operating margin: 5.3%
Construction (excl Middle East) underlying operating margin (incl Middle East): 3.0%

GALLIFORD TRY
Total revenue: £2,670m
Construction revenue: £1,503m
Construction as % of Total revenue: 56.3%

Total underlying operating profit: £135.0m
Construction underlying operating profit: £15.8m
Construction as % of Total underlying operating profit: 11.7%

Total underlying operating margin: 5.1%
Construction underlying operating margin: 1.1%

[speedsgh] 21/2/2017 14:32

NOTE: The following compares figs in CLLN 2015 Annual Report with figs in GFRD 2016 Annual Report in an attempt to compare importance/performance of Construction within each company. More up-to-date figs for CLLN will of course be released shortly but perhaps useful for now as a comparison.

Looks like Construction represents a large % of total revenue for GFRD (56.3%) than for CLLN (40.5%) but margins on Construction are much poorer at GFRD (1.1%) compared to CLLN (3.4%).

Please feel free to point out any glaring errors that I may have made...

CARILLION
Total revenue: £4,586.9m
Construction revenue (incl Middle East): £1,859.9m
Construction as % of Total revenue: 40.5%

Total underlying operating profit: £259.0m
Construction underlying operating profit (incl Middle East): £63.1m
Construction as % of Total underlying operating profit: 24.4%

Total underlying operating margin: 5.3%
Construction underlying operating margin (incl Middle East): 3.4%

GALLIFORD TRY
Total revenue: £2,670m
Construction revenue: £1,503m
Construction as % of Total revenue: 56.3%

Total underlying operating profit: £135.0m
Construction underlying operating profit: £15.8m
Construction as % of Total underlying operating profit: 11.7%

Total underlying operating margin: 5.1%
Construction underlying operating margin: 1.1%

[m4rtinu] 21/2/2017 13:46

Kcs - makes you wonder why G Try bother with construction. Cheers.

All the construction co's could do with a share of this:



Not in favour of it as a tax payer, would selfishly prefer something that goes SW - NE. In favour, if CLLN get something from it.

[kcsham] 21/2/2017 13:21

m4tinu - Construction is difficult business, risky and with paper thin margin.Extract from G Try's half year report:Construction -- Revenue of GBP742.0 million (H1 2016: GBP738.6 million), with cash balance of GBP110.8 million (H1 2016: GBP154.7 million) reflecting delayed cash flows on some legacy projects. -- Operating margin at 0.4% (H1 2016: 1.2%) continues to be constrained by the resolution of legacy contracts; margins on new projects support improving divisional returns in future years. -- Order book solid at GBP3.4 billion (H1 2016: GBP3.7 billion), as the business continues its disciplined approach to contract selection. -- 2021 financial targets include revenue of GBP1.8 billion, operating margin of at least 2% and net cash of GBP200 million.Carillion's statement:Our performance in 2016 continues to reflect the Group's strategy for sustainable profitable growth through investing in our people, building long-term trusted partnerships, transferring knowledge and skills to new and existing markets in order to expand our support services and infrastructure activities and providing a selective, high-quality construction capability.Carillion's intention to expand their support services and high-quality construction is that attracts me into buying Carillion.

[m4rtinu] 21/2/2017 09:56

From Galliford Try this am; posted for the construction aspects which may be of interest:

Galliford Try upped its interim dividend by 23% as it entered the second half with growing profits and record order books in two of its three businesses but saw construction profits fall as new management continues to deal with legacy issues.

Construction continues to look to resolve legacy contracts, with "steady progress" reported by chief executive Peter Truscott, while the contribution from newer work is "encouraging, demonstrating that the underlying business is strong".

For the six months to 31 December, group revenue of £131bn was up 3% on the same period in the previous year, with Linden Homes up 12%, Partnerships down 4% and construction just above flat.

Group profit before tax were up 19% to £63m and earnings per share by 19% to 61.9p, as profits grew 21% in residential, 9% in Partnerships and fell 68% in construction.

"... whilst Construction is lower than the prior year, it remains both at a very comfortable level and, more importantly, of high quality. Our improved debt facilities have further strengthened the balance sheet, providing financial flexibility to underpin our strategy for growth."

[m4rtinu] 21/2/2017 09:47

I think both of those articles are from the Motley Fool but aren't they a little at odds with each other.

[kcsham] 21/2/2017 08:07

Thanks lab305 for the above.

[kcsham] 21/2/2017 08:05

Few could argue that leading integrated support services firm Carillion (LSE: CLLN) has underperformed over the last few years, with earnings in decline and the share price now lingering around eight-year lows. Value investors will no doubt be circling, but I on the other hand can see even greater attractions for income seekers.£1.5bn contract winAt the start of this month, the Wolverhampton-based firm announced that its Carillion telent joint venture had been awarded a three-year contract extension (extendable to five years) to its framework agreement with BT's Openreach division. It has a potential value of up to £1.5bn. The 60:40 joint venture between Carillion and telecoms group telent will provide a wide range of services including the maintenance, extension and repair of the telephone and data network in the North East, Midlands & Wales, South West, and London & North Home Counties regions.The initial three-year extension period runs until the end of 2021 and builds on an existing eight-year relationship between Openreach and Carillion telent, during which time the latter has been Openreach's main delivery partner for the management, maintenance and upgrading of its broadband network. The new agreement could generate up to £900m of revenue over the three years, of which Carillion's 60% share would equate to £540m. The total value of the contract could increase to £1.5bn if the optional two-year extension is invoked.World Trade CentreThe news follows another joint venture win for the firm last month, when the Dubai World Trade Centre awarded a £160m contract to deliver Phase 1A6 of the One Central development in the heart of the city's Central Business District. It seems as though Carillion has started the year on a good footing, winning major contracts with prestigious clients, both at home and abroad.It could of course be argued that winning major international contracts such as these is just business as usual for a £1bn multinational facilities management and construction services company like this, and that's true. But with annual revenues set to break the £5bn threshold in 2017 and pre-tax profits likely to exceed £180m, the shares look undervalued at just 6.6 times forecast earnings.Furthermore, the depressed share price has boosted the already-healthy shareholder payouts which continue to rise with each passing year, and now boast a monster 8.3% yield. With dividend cover at almost two times forecast earnings, there's also plenty of room for future growth.Juicy dividendAnother FTSE 250 firm that likes to reward is shareholders handsomely is Inmarsat (LSE: ISAT). The satellite communication services provider has increased its shareholder payouts without fail since it was first listed on the London Stock Exchange in 2005.The company has struggled to grow its earnings in recent years and the share price has tumbled as a result, earlier this month sinking below 600p for the first time in four years. Inmarsat's shares are trading at a 33% discount to a year ago, boosting the prospective dividend yield to a juicy 6.6%.