Cape PLC Share Discussion Threads

[cockneyrebel] 04/9/2012 12:48

The divi is yours if you're holding at the close tonight.

CR

[r90ssg] 03/9/2012 17:19

Housemartin2, no problem, I work for a competitor of cape on the financial side, so have a good understanding on this. The large working capital requirement will be for the Algeria contract. Its an insulation project, so circa 60% of the cost will be materials, the prices of metal jacketing, probably aluminium or stainless steel can fluctuate significantly over a project of 12-18 months, therefore these are generally bought in advance.I bought in at 187 early august and would have banked the 30% this week but just can't bring myself to sell out when there are definitely upsides to consider. The new CEO will not have left any skeletons in the closet, it's obviously in his interests to disclose these now. In fact I believe he has intentionally written off more than necessary. Take he Algerian contract, it is most likely that the project team were holding an accrual against a potential claim. It is uncommon to end these projects without some sort of claim for Unproductive working due to clashes outside your control, poor client planning and late release of work leading to prolongation costs. These can add up to a significant number through the contract with success rates of around 30-50% of the value given optimistic claims as well as client counter claims. Therefore, I would suggest that the new CEO has removed this from the numbers as well as made a contingency against further claim costs. It will end up in a claim and a big boost to the numbers next year if successful, if not you won't hear about it.

[bogotatrader] 03/9/2012 14:48

New director has meetings with some institutional investors this week.....if they decide to buy and there is little stock about..then where will the price be.....

[aleks_atanasov] 03/9/2012 14:44

results were definitely ahead of expectations, thats why it opened at 210p, which is +5% than it closed the previous day and from there its locked in a trend... the only question is, because trees dont grow to the sky.. when will a few traders throw the towel and end the trend.

[doubleorquits] 03/9/2012 14:03

Tim Eggar buys 12000 shares (£27k+) at the end of last week after nice buy by CEO's wife in June at 253p.

I'm beginning to think that the bad news is out now and from the report there is a hint that we are in line or in some cases ahead of expectations.

Ex-div for 4.5p on Wednesday as well.

[aleks_atanasov] 03/9/2012 11:37

still looking good on the chart, some profit taking today

[liberatingsteptoe] 02/9/2012 14:49

Sunday Telegraph: Questor says Buy.
Trading on a December 2012 earnings multiple of 8.8, falling to 6, the shares are undoubtedly cheap.
The new management has to tighten up the controls-and win more contracts. But, since the bad news appears to be all out, the shares are a buy again.

[housemartin2] 02/9/2012 08:55

R90. Thanks for this. As I suspecteed this is what we used to call a Cost Plus Contract. Your suggestions around Cape probably having requested this change is interesting and understandable. The lower margins being a trade off against limiting liability seems reasonable. I still remain concerned that all may not be in the numbers for this contract; my conceerns not helped if this is the same contract that requires the extra working capital. However, based on your post, I am now inclined to consider it to be just a run of the mill adjustment that occur in this type of business. Fingers crossed of course.

[bogotatrader] 01/9/2012 18:53

liam...on occassions I do trade from Bogata.....hasta lunes....

[bogotatrader] 31/8/2012 12:47

This one is firming up and good for another 50-60p to 300p level fairly quickly and even then the forward P/e would be about 8 or so......

[liam1om] 31/8/2012 12:29

Hi BogotaTrader - Do you actually trade from Bogota?

[bogotatrader] 31/8/2012 11:23

Say 35p earnings....and P/E of 10 then we have 350p.......looking way too cheap and income funds will want.....

[and1] 31/8/2012 09:29

where can you get 6% divi on a growth/recovery stock which has a good chance of moving up 30% within 6 months and almost doubling within a couple of years?

[flyingbull] 30/8/2012 19:20

Just a short message to let you know the September oil stock competition is now open, link attached below.

[r90ssg] 30/8/2012 18:54

@Housemartin2, cost reimbursable is the safest form of contract available with cost coverage guaranteed and margin levels agreed, normally linked to performance kpi's. It would suggest the workscope on the project is not being released efficiently or is subject to constant change, any change to from lump sum to reimbursable is likely to have been at capes request to reduce claim liabilities through the project.

[liam1om] 30/8/2012 17:10

From the Guardian:


Cape flies as investors breathe a sigh of relief

After two profit warnings, the industrial services company says full-year results should meet expectations

Share
Email

Investors sent Cape to the top of the mid-cap leader board, after the industrial services company managed to publish its half-year results without any nasty surprises.

Cape, which provides everything from insulation to industrial cleaning services to plant operators in the energy and mining sector, has had a tough first half, issuing two profit warnings, which sent its shares to a low of 182p. But on Wednesday it said it expects to meet its full-year outlook, driving the shares up 18% to 228p.

In May, the company said it would take a one-off charge of £14m – one fifth of last year's profits – after discovering additional costs at its Arzew LNG project in Algeria. On Thursday, however, it said it would benefit from improved productivity at this project in the second half.

Cape also issued a profit warning earlier this month, citing a lack of major new projects in Australia. On Thursday Cape said it had cut costs in the segment and has begun a review of operations and assets in the region.

Sanjeev Bahl at Numis upgraded the stock from add to buy, citing the management team's confidence that Cape's current order book of £920m covers around 90% of forecast revenues, and that they are on track to meet analyst expectations for the full-year. He writes:

Whilst 1H12 is a significant step down from the previous year, we believe Cape's Algerian contract issues, and the days of over-exuberant Pacific Rim contract award and Middle East margin expectations are behind them. Consensus estimates for FY12 are close to covered by existing backlog and over £307m of work has already been secured for FY13 (inline with historical visibility for this time of year).
We believe management guidance is significantly more conservative than it has been in the past and, assuming no further skeletons in the closet, holds potential to be beaten.

James Thompson at JP Morgan Cazenove said the results were broadly in-line with his expectations, which had been revised down following the profit warning earlier this month.

The UK business performed strongly, as did the Middle East. Issues in Australia had been highlighted previously. Cape states that it is undertaking a review aimed at restructuring the broader Far East business. Given the scale of the apparent LNG opportunity in Australia, we remain positive on long-term outlook for this market.

He said he remained cautious on the LNG project in Algeria, given that the project is still someway from completion. He has an overweight rating on the stock, with a price target of 399p.

[housemartin2] 30/8/2012 13:40

Was concerned about the dividend, even though historically well covered, as cash flow not the best. However main thing is that they produced no more nasty surprises which presumably is why its bounced back a bit. Couple of things from the statement that concerned me though -

Asia/Pacific ring. References to an Asian contract now on a 're-imbursable cost basis', which if I understand this correctly, is bad news for margins if customer can get away with this (which appears they can) This raises questions about the provisions of contracts in place and the ability of other customers to replicate this process. Also references to cash flow working capital increases due to 'requirements on a large Asian contract' - related ??

There is a Contingent Liability reference to former employee winning case against the company 'a case that could give rise to additional liabilities to industrial disease claims' Given the company's history on these and the possibility that there could be more, gives me concerns.

I haven't listed to the presentation yet so may be something there that gives more form to these things.

[and1] 30/8/2012 10:35

looks like a company with a solid business growth model but with a couple of short term setbacks. good entry point for the buffet like investor

[fittster] 30/8/2012 09:53

Hmm, some people seemed to have called this one very wrong.

Got in yesterday at 185.5 so rather chuffed this morning.

[declan2] 30/8/2012 09:32

I'll try a short here.

[nicd] 30/8/2012 09:12

MT, I unfiltered you to see if you had changed your ways. I see not, so back on filter

[mechanical trader] 30/8/2012 09:07

WHAT!! are the MMs taking the pith?

results looked carp to me given past
problems.

[nicd] 30/8/2012 09:04

market got this wrong

[monkeymagic3] 30/8/2012 08:27

Didn't expect this!