ISG Share Discussion Threads

[edmundshaw] 09/9/2015 16:35

Up to 182p. I am liking the price action since the results, which were good. If we can maintain good margins, workload and management performance, these should be a nice hold for a year or two!

This is the second time I have invested in ISG (I sold out a year ago cos £3 seemed to be factoring in a problem free future, and I knew construction was a difficult karket from other shares I owned or looked at). This is not their first hiccup in performance - the third since 2009 by my reckoning - so I am not sure I want to hold them for the long term (i.e. several years).

[paleje] 08/9/2015 21:37

Well if management can keep it up Edmund, you never know, we might see 50% or more on top of that 5p divi next time. Staying with Numis's forecast, we're on a current year PE of under 6 too so looking cheap. Won't surprise me if one or more of the shares mags picks it as a nice recovery in the making.

[edmundshaw] 08/9/2015 13:23

335p seems to me a little optimistic. But only a little. Pleased with the 5p dividend.

[paleje] 08/9/2015 11:26

Numis reiterated this morning:

08 Sep 15 ISG PLC Numis Buy 177.00 335.00 335.00 Reiterates

[trendfollow] 08/9/2015 11:16

Big trades going through, someone is keen and price is going up...

[dgwinterbottom] 08/9/2015 11:00

According to someone I know in the industry they quote initially on small margins with the hope of increasing the margin on contract extras/extensions.

[oregano] 08/9/2015 10:46

if you use Numis' forecasts for this year, this is on 6.6x in a red hot market, with an order book that has grown by 14% yoy and gives 61% visibility of their forecast revenues.

If you double their H2, you get a profit of £28m, vs Numis' forecast of £18m.

this could be £3 pretty easily.

[a2584728] 08/9/2015 10:28

I am still a sceptic.

[salpara111] 08/9/2015 08:28

I have had this on my watch list for a while but now feel that the risk/reward profile has improved enough to look at taking a stake.
It is clear that all their work is on very low margins so pricing contracts and then managing them well is critical to making any money.

[paleje] 08/9/2015 08:11

This mornings results more or less as per Numis figures 7m PBT and 5p divi as promised, order book up 14% from 6% earlier in year with high proportion for delivery within the year. So far so good.

[edmundshaw] 27/8/2015 14:33

When the management was making some (far from unique) mistakes in the building contracting due to a tough environment, the share price at £3.50 had been factoring in a near flawless performance. The subsequent refinancing dilution also hurts the chances of regaining that level.

Nevertheless, with a better business environment and the mistakes behind them, 160p level seems rather over-cautious. To me.

[a2584728] 27/8/2015 08:55

All very nice but has it any margin on it and can the management make it work, I have my doubts.

[johnsoho] 20/7/2015 15:10

Hmm, think these are now looking very cheap so have just purchased a few.... Next results they may well be reinstating their dividend.....if they do I think these may well start to go very much higher but as always, time will tell. NAI,dyor etc

[scottishfield] 14/7/2015 16:19

cheers paleje

[skinny] 14/7/2015 15:09

A couple of others - I still haven't bought back in.

Jefferies International Buy 167.00 370.00 370.00 Reiterates

Numis Buy 167.00 335.00 335.00 Reiterates

[paleje] 14/7/2015 15:06

3i like them and report bullish forecasts from Numis:-

ISG looks dirt cheap
By Lee Wild | Tue, 14th July 2015 - 14:02
Share this
ISG looks dirt cheap Five months after a savage profits warning then dire set of half-year results just four weeks later, builder and office fit-out firm ISG (ISG) has reassured shareholders that full-year results will be no worse than heavily-downgraded forecasts. It will pay a dividend, too, following a strong second half, and is optimistic about 2016.
Investors certainly appear willing to forgive. ISG shares had lost as much as 60% of their value between January and early April, plunging to 140p at their nadir. However, they’re up 4% Tuesday as management's bullish tone hints at a recovery in progress.

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At least bosses have not been idle. After warning that troublesome construction contracts would cause a £7 million profits miss, and flagging £6 million of extra costs and making an £11 million provision for shutting its Tonbridge office, they quickly raised a net £15 million at 170p.

Now, ISG says results for the year ended 30 June 2015 will be in line with reduced expectations, although it does admit its estimates may be out by up to £2 million. That's because chiefs are still thrashing out terms on the older loss-making construction contracts which caused the profits warning in February.

"We believe the poor performance and painful restructuring of the UK Construction division is now behind us," they add.

(click to enlarge)

Expect a reported full-year loss of £23.3 million following a further £10.5 million of provisions announced Tuesday, says Numis Securities. The broker pencils in a 39% slump in pre-tax profit to £7 million on revenue up 18% at £1.7 billion. We'll get confirmation on 8 September. It does, however, maintain forecasts for profit of £18 million and revenue of £1.8 billion in 2016 as trading conditions improve.

And they already are. "The overall performance of our specialist fit out, engineering services and retail businesses in the UK and internationally has been excellent and trading has been ahead of management's expectations," cheered ISG. "This provides a firm basis for our confidence in the Group results for next year, supported also by a turnaround in UK Construction where performance of the pipeline of new contracts procured over the past eighteen months is meeting management's expectations."

The order book is up 6% at £1.1 billion, over three-quarters of which relates to work in 2016, and demand in its core sectors remains "strong and stable". ISG won £80 million of commercial office fit out projects in the three months to June, too. The share placing in March also means ISG has £50 million of net cash and management has promised an increase in the final dividend to 5p.

At 169p, ISG shares trade on 6.2 times Numis estimates for 2016 earnings per share (EPS) of 27.3p. There's a prospective yield of 5.6%, too. "The shares look materially too cheap," cries Numis analyst Howard Seymour. "In our view, the current share price fails to reflect the reduction in both the risk profile and our estimates of a materially improved profit position in 2016 and we therefore remain buyers."

Seymour believes the shares will be worth 345p. At that price they would trade on 12.6 times forward earnings, not unreasonable for the potential growth on offer. Remember, too, that Numis forecasts year-end 2016 net cash of £63 million compared with a company currently worth just £84 million. Strip that out and the underlying business is valued at just 1.5 times earnings.

The stats certainly look appealing. That the shares appear so undervalued implies many in the market do not. This, however, does not look like a value trap and these will be proved to be bargain levels if ISG does the numbers next year.

[jhan66] 14/7/2015 14:17

Thanks grahamburn, I hadn't realised the last payment was omitted. At least it shows some fiduciary sense by the board. Happy to hold.

[dlku] 14/7/2015 10:30

But ROK and CNT highlight what happens when a contract or three goes wrong

[grahamburn] 14/7/2015 10:27

dlku.

Short answer to your question is "No".

Slightly longer answer would be: "ROK and CNT were in a different market segment."

Edmund.

Much more succinct summary than mine! Thank you.

[edmundshaw] 14/7/2015 10:21

A raised final dividend (from last year) seems to suggest that the ongoing yield will revert to previous performance. Especially as the sector is looking robust at the moment.

ISG is recovering well in the current upturn, as are other building related firms.

[dlku] 14/7/2015 10:19

ROK and CNT went under, arent they similar?

[grahamburn] 14/7/2015 10:07

Don't want to dampen your enthusiasm, jhan66, as ISG now looks like it will recover from its recent woes and return to being a good dividend payer, but the yield as shown on advfn is misleading. The interim dividend in March was passed completely, so with just the final as indicated today, the yield this year is only around 3%.

The statement today is positive, so hopefully next year will see a dramatic recovery in both share price and yield.

IMO some of the comments made by others on here today do not reflect either the company or its prospects. I would guess that there may have been cashflow difficulties during the last year or two which has tarnished its reputation with sub-contractors - and some BB posters.

[jhan66] 14/7/2015 09:11

I've only recently bought in but it seems favourable to me.
The Board are bullish, their market is buoyant. Dividend yield is excellent and prospects appear to be healthy.
heavy short term debt is not ideal but I'll settle for a few million coming out to shareholders, I have too many holding where the dividend is a feeble token.
I don't know the history too well. Perhaps they regularly underachieve but I don't see much downside for the moment.

[edmundshaw] 14/7/2015 08:57

Try a bath and some deodorant then dlku.

[dlku] 14/7/2015 08:31

very smelly indeed