Interserve Share Discussion Threads

[dogwalker] 06/5/2016 11:14

I'd stick with it .Maybe buy some more?

[ali47fish] 06/5/2016 10:33

i've been waiting to see what motley fool might says and this is it:

Contract issues

Meanwhile, shares in Interserve (LSE: IRV) have fallen by around 20% today after it announced a £70m exceptional contract provision will be taken in the first half of 2016 due to the further deterioration of the company’s Glasgow energy from waste contract. The issues relate to the design, procurement and installation of the gasification plant, together with continuing challenges with the supply chain that will result in further cost overruns and delays. Although Interserve’s balance sheet remains robust, the full impact of the contract provision will be to increase net debt by £35m.

Clearly, the news is extremely disappointing and Interserve’s shares could come under further pressure in the short run. However, for long-term investors this could be an excellent opportunity to buy since the company’s other divisions are performing well and its shares are now trading at their lowest level in around four years.

i still dont know if i should stick with it ?

[wad collector] 06/5/2016 10:03

Looks like it is going to be a long haul back up to the highs of 2014. Didn't see this coming , however , my planning is decades long so will just sit and hold. I doubt they will drop the dividend ; too many funds would object , but it makes little odds to me , the cost is born either by the share price or the yield.

[lox] 06/5/2016 10:02

Oversold, news are bad but there is a mixture of panic selling and may effect there...

[buoycat] 06/5/2016 09:46

The fall seems a tad overdone

[jeffian] 06/5/2016 09:44

#3454,

Phillis, I was commenting on the specific issues raised by a bearish post citing the resignation of the Equipment Services CEO (which may or may not have had something to do with the fact that his division was under "strategic review") and the extent of intangibles (arising from acquisitions) on the balance sheet. Today's profit warning is based on a mispricing of a design and construction project. The poster was right to be bearish.....but for the wrong reasons!

[edmundshaw] 06/5/2016 09:32

JSW with respect that is rubbish. They have committed debt facilities totalling £536 million and debt at year end was £309, and besides, dividends paid amount to around the £35m that will be impacting IRV this year and next, so there is plenty of headroom.

[the juggler] 06/5/2016 09:20

There are going to be some irate shareholders at the AGM next Tuesday 10th May. The 10% fall on Wednesday this week was obviously caused by those in the know. What a massive fall this is, they will be lucky to stay in the FTSE 250 at this rate.

[edmundshaw] 06/5/2016 09:06

If they maintained the current dividend, the yield would be 8-9% around these prices. That is unlikely. The questions are how much the cut in EPS and dividend, (and therefore what is a new fair price), and what are the prospects and timescale for a recovery in eps and divi.

[gostevie63] 06/5/2016 09:01

Hi ali1947fish,

I am in a similar situation. Have put in a sell order at 300p in the hope that it gets filled if the share price creeps upwards during the day. Otherwise I'll probably sell before the close anyway. I can't see anyway they will be able to maintain the current dividend level.

Steve

[phillis] 06/5/2016 09:00

jeffian

No smoke without fire eh?

The City always knows before the hapless pi

[edmundshaw] 06/5/2016 08:46

FWIW I bought a few around 280-odd, for the longer term. But only a few... I think at 400p some of this news was already in the price.

[edmundshaw] 06/5/2016 08:44

Crunch numbers and make estimates. Then make a decision. Head not heart time.

But the short term effect of dropping out of the 250 might affect your timing if you are buying. That effect if real, but the timing of that effect I have never managed to pin down, so if buying, I tend to just be a bit greedy for a rock bottom price.

[imranawan] 06/5/2016 08:43

ali47fish - you have to make up your own mind. FWIW I sold out this am for a loss, as I wasn't prepared to average down, given the contract issue. You have to work out whether this was a one-off, or whether there will be other problems, and decide whether you can use the proceeds better elsewhere.

[spooky] 06/5/2016 08:41

Set a stop when you buy and sell if the shares fall through it. Simple instructions, will save you a fortune in the long run IMO.

[edmundshaw] 06/5/2016 08:41

Salpara, agree absolutely, though in the past Interserve has been better than most.

Tripped up big time here though. Ringrose must be livid.

[ali47fish] 06/5/2016 08:38

what does one do in this situation-sell as it might get worse? or are there any redeeming aspects?

[salpara111] 06/5/2016 08:30

Time and time again, big contracting companies refuse to pay for the necessary professional risk management required when pricing large contracts.
Look at the unholy mess that Serco ended up in as a result of poorly priced contracts.
If you are taking that much risk on your own balance sheet you better make damn sure that you have analysed it to death or that you have hedged the risk through insurance.

[yf23_1] 06/5/2016 08:28

Another Balfour Beatty ?
I was feeling miffed when I sold at 366 at the bottom of the last dip.
Now I'm feeling rather better.
Gotta learn to avoid value traps whilst lookin at divi.

[edmundshaw] 06/5/2016 08:21

RB, I don't think customers care that much about one badly estimated (or bad luck) contract. They care about delivery, trust etc. I don't see contract writing as being affected.

[sharetrader3006] 06/5/2016 08:20

Methinks you missed rather a few decimal points off your figure Edmund.

[shanklin] 06/5/2016 08:20

Given the scale of the problem, the problem was bound to leak. Its not as if knowledge of it could have been limited to IRV employees. Amazing that a sharper share price move down had not happened earlier.

All IMHO

[edmundshaw] 06/5/2016 08:19

Just knocking numbers around...