Carillion Share Discussion Threads

[jaf1948] 30/1/2017 14:42

With the large amount of shorting, one would also expect a fair amount of misinformation circulating about this share.

[w1ndjammer] 30/1/2017 12:00

looks like 200p is on the cards, will start buying soon.

WJ.

[rcturner2] 30/1/2017 10:00

LG, what do you think the reason for the shorting is then?

[spoole5] 29/1/2017 20:57

Latest digitalook forecasts; year ending 31/12/16 revenue 4,902m profit 181m eps 33.9 divi 18.66. 31/12/17 revenue 5,080m profit 182m eps 34.22 divi 19.18. 31/12/18 revenue 5255 profit 190m eps 35.72 divi 19.56p. Forward p/e 6.9. Divi yield 8.3%.

[lord gnome] 29/1/2017 19:09

So all we are talking about is a pension deficit which is slightly more than one year's gross profits, and which is largely the creation of low returns on gilts and will therefore reduce or disappear once interest rates are back to anything near normal (all in one sentence).
Please don't tell me that this is a reason for all the shorting. It is a total nonsense. I therefore deduce that CLLN is a screaming buy for anyone seeking income - i.e. me.

[jaf1948] 29/1/2017 17:52

I got in touch with the company (even over the weekend they are helpful) and they confirmed the pension deficit as just over £400m at the end of June 2016. It was, as m4rtinu correctly states, around £318m at year end 2015 but went up due to the fall in bond yields after the Brexit result.

[m4rtinu] 29/1/2017 16:33

For the same period, gross profit (before admin costs)

390 390 350 330 340

[m4rtinu] 29/1/2017 16:26

As far as I can see from year end accounts, pension deficit has been (£m)

2011 2012 2013 2014 2015
230 270 295 406 318

[lab305] 29/1/2017 10:37

Don"t shoot the messenger.!

[rcturner2] 29/1/2017 10:23

debt is low???

[lab305] 29/1/2017 09:11

Construction set to soar?
Construction and related services have been in a slump for the past two years, with the Brexit result giving the sector a further kicking just as it looked like we might be seeing the shoots of a recovery.

That’s made a lot of companies look very cheap to me, including Carillion (LSE: CLLN). The analysts are expecting three pretty flat years for earnings from the facilities management and construction services firm, but that does’t seem too bad to me. In fact, it would represent five years of stable earnings after a bit of a slump in 2012 and 2013.

The share price, which has collapsed to 236p today, gives us a forward P/E of around seven for this year, and that’s only about half the long-term FTSE average. That might be understandable for a struggling company, but Carillion is forecast to pay reasonably well covered dividends of around 8%.

There seems to be little or no Brexit risk here either, debt is low, and I see a strong upwards potential.

[11_percent] 28/1/2017 18:20

Just started have a look at this.

The share price has been falling for years.

It can't be about the pension fund.

In the mean timme, You get a 8% yield, which is covered.

[lonrho] 28/1/2017 18:17

Maybe the billion refers to the cost if it had to get an insurance company to take over its liabilities and is always way in excess of what companies show in their accounts.

[philo124] 28/1/2017 18:00

Thank guys; I did google before asking, missed it in the accounts.

[valhamos] 28/1/2017 17:33

Isn't it easier just to go to the accounts?

The pension deficit net of deferred tax was £317.6 million at 31 December 2015 increasing to £401.7 million "primarily due to a reduction in the AA bond yield following the referendum vote to leave the European Union" at 30 June 2016.

[jaf1948] 28/1/2017 17:09

This article gives it as £318m (as at 03/03/16).
ADVFN won't let met print the URL but it is a company with 3 letters the same between h and j and article number 299692.
[...]

This article gives it as £400m (no date but around April 2016)
hxxps://www.sharescope.co.uk/philoakley_article89.jsp

This article gives it as 37% of market cap which makes it then about £398m (as at 20/10/16)
hxxp://www.moneyobserver.com/our-analysis/dividends-danger-11-shares-big-pension-deficits

Your article is dated 13/06/16 so I cannot believe the deficit tripled in 3 months (and that was before Brexit !). It also says 'The UK construction company’s closed defined benefit scheme’s investments are split nearly evenly between fixed income – mostly government bonds – and equities, with a deficit of around £1bn, according to Ellison.' Does that not mean that the £1bn deficit only applies to the closed defined benefits scheme and not the whole pension fund ?

[essentialinvestor] 28/1/2017 17:05

I do not go short individual shares, but yes fully expected a warning which
never came. However the share price is now near a level I would have expected
following a profits warning.

[rcturner2] 28/1/2017 16:57

This article gives the pension deficit as £1bn.

hxxps://www.ipe.com/news/funding/carillion-fund-defies-regulatory-pressure-with-alternative-de-risking/10013749.fullarticle

[lonrho] 28/1/2017 16:06

Think I would prefer Carillion to Balfour which has a pension fund of £4 billion, has been making losses, but still has a market cap of approximately twice Carillion. Think as has been noted in previous posts the shorters are expecting a profit warning,probably from the construction side, as large contracts have a tendency in some cases to go badly wrong.

[jaf1948] 28/1/2017 14:39

Philo, Apologies, I was looking at the wrong figure. You are right that it is nearer £400m. But one of the reasons that people are worried is that is a very high percentage of market cap but of course the market cap is substantially lower because of the fall in the share price The pension fund is in excess of £2bn so it is a serious deficit but not fatal IMO.

Some people are worried about it; some people have taken out shorts because of it; some people are content that the company has it under control and reducing it. Your choice !

[philo124] 28/1/2017 13:57

Thanks, thought it might have been £400m.

[jaf1948] 28/1/2017 13:26

Philo, £50m ! Actually, slightly less. (EDIT: SEE CORRECTION BELOW)

RC, From what I have learnt, CLLN have a better handle on their pension deficit than you or most of the shorters believe. As EssentialInvestor said yesterday, people have expected CLLN to warn over the past couple of years, which never happened,unlike most of the other players in the sector and that is probably the main reason why the shorting began.

[philo124] 28/1/2017 13:06

What is the amount of the pension deficit? To the nearest £50mill will do. Thanks.

[rcturner2] 28/1/2017 12:21

JAF, the actual size of the deficit is as you say influenced by external factors such as bond and interest rates. However CLLNs ability to deal with the deficit over time is very much dependent on their profits. Hedge funds do not pick short targets by throwing darts at the newspaper. I must admit that like many holders I do not fully see what the shorters are seeing, but they are not shorting on a whim.