Carillion Share Discussion Threads

[edmundshaw] 02/3/2017 11:31

So Peel Hunt says "well positioned in its selected markets and management has delivered during challenging times" and predicts 334p EPS. But sets a price target of 200p. Because the price was 207p and just fell 5%. Typical broker follow-the-market" garbage.

In what way is a PE of 7 and a well covered yield of over 9% for a "well positioned" business a sensible target???

[speedsgh] 02/3/2017 11:25

Carillon to unveil wave of voluntary layoffs -

Carillion is set to unveil a wave of voluntary redundancies across the group this week.

The £5bn turnover contractor called for volunteers at the start of the year as part of a £50m cost-saving plan for 2017.

A source told the Enquirer: “There have been several cost cutting plans rolled out over the years. This is the first where redundancies are being offered across the entire group from top directors down to supervisors.”

“A lot of people have said they are going for it because contractors are crying out for skilled people. But it remains to be seen who will get it.”...

[speedsgh] 02/3/2017 11:21

Chance to build for future but at high risk -

Conclusion...
MY ADVICE Buy
WHY If the company’s pledges on debt and dividends are reliable shares look undervalued, but this is still a high-risk purchase

[speedsgh] 02/3/2017 11:04

FWIW...

Peel Hunt: Carillion faces near-term headwinds -

Support services company Carillion (CLLN) is well positioned but there are headwinds that provoke near-term risks, says Peel Hunt.

Analyst Andrew Nussey retained his ‘reduce’ recommendation and decreased the target price from 225p to 200p on the stock following prelims.

The shares were trading down 5%, or 11p, at 207p at the time of writing.

‘The overall outlook is largely unchanged, but we sense that near-term headwinds are slightly stronger with the order book providing lower visibility. We reduce our December 2017 profit before tax from £191 million to £178 million to give earnings per share of 33.4p from 35.8p,’ he said.

Nussey added that Carillion remains ‘well positioned in its selected markets and management has delivered during challenging times’.

‘However, modest trading headwinds and management change had increased near-term risk. The yield provides some support but modest growth and limited acquisition/expansion opportunities leave the shares vulnerable on debt-adjusted valuation measures,’ he said.

[valhamos] 02/3/2017 10:38

Maybe worth reminding posters who keep saying debt is increasing that this is largely a result of the movement on exchange rate with US dollar which affects the private placement borrowing. As this is hedged there will not be an increase in either interest cost or cash required to repay the loan at maturity as a result of the increased debt shown on the balance sheet.

[jaf1948] 02/3/2017 10:24

The question is whether people would be remotely worried by CLLN's numbers if it were not for the high percentage of shorters, especially those people who believe shorters know more than the rest of us.

[kcsham] 02/3/2017 10:01

Some statistics for 2016:Operating Margins - Support services: 6.7 %PPP: 9%Those are much better % than Construction services (M EAST): 2.4%Ditto (excluding Middle East). : 2.7% How Carillion acts on the above information?The company actively grow their business on Support Service. The revenues from the Support Service increased from £196 millions in 2012 to £469 millions in 2016.The also cut low margin Construction Services from £345 millions to £67 millions in the same period of time.Carillion will maintain its strong construction capability, focus on winning high-quality contracts in chosen markets and will be very selective in the Middle East.Shorters fans, want to know more? Do your own homework!

[kcsham] 02/3/2017 09:26

lab305 - good post and well done!

[kcsham] 02/3/2017 09:24

I must say the result of yesterday was not 100% positive but the world is not perfect. The company has a sizeable debt and pension deficits, this is everybody's knowledge and is in the price. The Carillion's management decided to increase the final dividend means there is no panic. Anybody thinks he/she has a better idea and knows more or howling like a beast is day dreaming.Checking the shorters' position on 27& 28 February, there was a lot of activities of opening and closing. More shorts were closed than opened. It proves the shorters' don't have much better idea on the outcome of the result in advance as some people try to suggest. Normally the performance of a share on the result day is not decisive, it takes professionals a day or two to assess the situation and make their conclusion. So no more howling and pretend to be a professional when you are not.I believe the closing price of today and tomorrow will be more important than yesterday's. K C

[m4rtinu] 02/3/2017 09:05

PS: what will the margin be, given it is M East? Also, it is a 50:50 JV.

"The contract, the first of $3 billion of construction deals that Dubai plans to award for the Expo in 2017, was won in a competitive procurement process, the Dubai government said."

[m4rtinu] 02/3/2017 09:03

I would say it is good to have views from both sides. BUT hold the press!!

[edmundshaw] 02/3/2017 08:58

IRV for example has a serious problem with waste-to-energy and has lost its CEO. The price has been commensurately slashed by a third.

CLLN has had its price slashed by a third too. There is a lot of chat about the debt and the pension, but I am amazed at how ignorant much of it is. Most people here have only read and absorbed the headlines in my view, or else are conveniently just reiterating these and then putting on their own spin, or ignoring the bits that don't support the bear view.

[kcsham] 02/3/2017 08:52

chris1604 - I admire you to have a courage to proposed the above but don't feel the same that you try to off your limit. I am glad no sensible person, even an idiot, will believe your suggestion will have any chance to work. Half the dividend and the share price will go up?

[chris1604] 02/3/2017 08:36

How can this be a good business. Profit margins are low,turnover is static,future contract visibility is down,debt is increasing and the pension deficit is substantial.
On the plus side the dividend is massive and belatedly the management are going to address the debt problem.unfortunately it is not clear how they are going to achieve this end. The solution is staring them in the face,just half the dividend and watch a gradual improvement in the shareprice

[rcturner2] 02/3/2017 08:22

IRV for example has a pension deficit of £50m and pays about £1m a year into the pension. Compare that with Carillion.

[lab305] 02/3/2017 08:18

Just look at Capita this morning and Interserve the other day and compare. Clln is streets ahead.

[neilyb675] 02/3/2017 08:16

4120

Excellent summary ✔

[lab305] 02/3/2017 08:02

Most are missing the point here. This is still a good business with a strong order book making decent profit. It is well run and hasn't hit the problems of its peers and yet the share price has been decimated. The dividend which many on here now speculate is unsustainable is covered around 1.8 times.
A PE of 12 to 15 would be the norm of a company with the above criteria but this one trades at around 7. The share price has collapsed 30%. Why is this? There has been no profit warning and the company continues to win contracts.
Sure the order book is down around 5% and so was profit after exceptionals but does that really justify the slaughter of the SP?
Many detractors on here both old and newly converted continually harp on about debt but as recently proven the company continues to borrow at even cheaper rates than before and has acknowledged that it will reduce debt going forward.
My point is that we are at crisis price but not in a crisis situation. The company is not in meltdown but the shares are. I continue to hold.

[w1ndjammer] 02/3/2017 07:46

the shorters are seeing safety in numbers but its a dangerous game, as someone
said its 30% stock short on crest. thats a turnover of 250 mill shares to unwind
without the share price rising.

dont worry you small timers you only need to click a button on IG to get out,
but you don`t half make alot of noise about it.

notice how quiet the thread was the other day when the share price was rising.

WJ.

[spoole5] 02/3/2017 07:29

Why would the shorts close here when the elephants are still in the room. The shorts will disappear when the company finally starts to deal with the issues it faces.

[ch1ck] 02/3/2017 05:45

Yesterday saw the largest volume spike in the share for at least three years.The results were as expected and the dividend not just held it was increased. From what I could see there were marginally more buys than sells in the trade.For me this is a positive sign with over 20 years of investing I look for grossly oversold shares with a strong order book and cash flow. Shorters are here to make money and are are not stupid they have used yesterday's results to to have one last throw of the dice but the smart ones started closing their positions.This will reverse quickly from here I am sureSafe trading all

[garycook] 02/3/2017 03:22

Shares of construction and support services group Carillion (LSE: CLLN) fell by more than 5% on Wednesday. The group said its pre-tax profit fell by 5% to £146.1m last year, despite a 14% rise in revenue.

Today I’ll highlight some of the problems that were flagged up in Carillion’s results. I’ll also explain why I’d prefer to invest in one of the group’s smaller peers, despite its much lower dividend yield.
This 9% yield hides problems

Carillion’s dividend rose by 1% to 18.45p last year. At the last-seen price of 206p, that gives a yield of 9%. But yields this high normally signal problems, and in my view this is no exception.

The value of Carillion’s order backlog plus probable orders fell by 8% to £16bn last year. Revenue visibility for the year ahead is just 74%, down from 84% at the same point last year.

Chairman Philip Green promised today that Carillion will “accelerate the rebalancing of our business into markets and sectors where we can win high-quality contracts”. But with 26% of this year’s revenue still unaccounted for, my concern is that the firm will accept anything it’s offered in order to hit revenue forecasts.

In my view, the risk for investors is that the good part of this company — support services — is being weighed down by a number of problem areas.

Revenue from support services rose by 7% last year. The underlying margin on this work rose from 5.8% to 6.7%, lifting profits by 25% to £182.7m.

Unfortunately, this strong performance was cancelled out by a 43% decline in profit from Public Private Partnership projects and a 36% drop in profit from Middle East construction work. Although revenue from other construction projects rose by 21% to £1,520m, the profit margins on this work fell from 3% to 2.7%, negating some of these gains.

Carillion’s balance sheet looks increasingly weak to me. Average net debt was £586m last year, more than four times group profits. The firm’s £810m pension deficit currently requires cash contributions of £47m per year.

The dividend wasn’t covered by free cash flow last year and in my view is unsustainable. In fact, I suspect Carillion may need a larger-scale restructuring if trading doesn’t improve. I’d stay away for the time being.

[m4rtinu] 01/3/2017 21:41

red, s2 - thanks.