Carillion Share Discussion Threads

[gkp heros] 21/8/2017 09:44

Plenty of money coming in for this now

[walbrock82] 21/8/2017 09:20

Is there value left for Carillion?

The segment breakdown of Carillion Business

Carillion’s construction is given zero value because it was responsible for the explosion of receivables, as well as payables.
Receivables and goodwill write down would wipe its £395m equity!

For Carillion’s support services that are their golden goose. With sales of £2.7bn and operating earnings of £152m, I will attach a reasonable 10X multiple giving it a value of £1.52bn.
But minus debt, pensions, but add in deferred tax assets, shareholders are left with negative equity of £150m!

Strategy to preserve shareholders’ wealth

First Carillion needs a cash infusion of £500m for it to restructure their business model and stabilise for the next 18 months to 24 months. A Rights issue at 30 pence = 1.66bn new shares giving a total of 2.1bn shares.

Shares fall to 40 pence = £838m market value.

Over 24 months, it uses £300m to reduce and pensions leaving it with £1.3bn in liabilities, which cause the shares to fall to 19p or £400m in market value.
Hopefully, by then it has restructured. Assuming Carillion is able to increase operating profits £10m each year for next five years, the cumulative profits come to £850m. Using £600m to reduce debt and pensions down to £700m.

After five years, operating profit is £190, add a 10X multiple gives it £1.9bn valuation minus debt and pension, then Carillion’s market equity is £1.2bn, a yield of 200% return if you invest two or two and a half years in the future.
(P.S. The above is a simulation of what could happen.)

For more of the above analysis and why there are flaws in my argument to save Carillion, click here:

[gkp heros] 21/8/2017 09:00

Looks like we have found support at 50p GLA

[sparky333] 21/8/2017 08:47

Haike ticking up again.Little known stock massively undervalued as strategic shift gains momentum PE 7 cash half of market cap and H1.Strategic shift to high margin specialist chemicals gaining significant momentum.One to watch

[rcturner2] 21/8/2017 08:07

racg, I haven't seen anyone post that they are "totally convinced it will go bust", that is a straw man argument of your own invention. The point is there is a real non-zero risk of it going bust. Could be 5%, could be 10%, still a hell of a gamble.

[bookbroker] 21/8/2017 03:31

Banks will not see this to go bust, they will force shareholders to take the dilution, a case of how much existing shareholders will or are prepared to accept, cat and mouse game, so a partial debt for equity and rights issue on cards, and to exit large parts of the business that are over a barrel likely. The debts and other liabilities too great currently, so any takeover completely out of the question, whichever way you look at this the company is going to shrink further!

[racg] 20/8/2017 22:30

No problem. I don't. I think a lot of cobblers is being written by some people too. Equity raise? Yes sure. Go bust, do not think so. Number of levers can and are being pulled. But of course, I know as much as all those totally convinced it will go bust and yet with no position, apparently. The vehemence of the continual repetition is pathetic, disingenuous. Has Carillion found itself in a pickle? Of course. Can it recover? I d say odds are better than even. But if it is such a basket case, go short and have some conviction, I d say; not claim you are here to help all us poor lambs who are long and have no idea what we are doing. Add something to the debate apart from, it is going bust. It would be a lot better thread then.

[wllmherk] 20/8/2017 21:29

At the risk of upsetting racg and excel I really do think do think this might go bust, can't see them raising enough cash :(

wllm

[kunama] 20/8/2017 08:26

There won't be any announcement on Wednesday. It was stated last month that the first half results will be delayed until September and be released with the results of the strategic review. As far as I'm aware the specific date for this has not yet been announced. Could be good, bad or indifferent; but it won't be next Wednesday.

[topvest] 20/8/2017 07:55

xc1 - that's a fair summary in my view. Guess it will be interesting to see what happens on Wed.

[xc1] 20/8/2017 07:24

Troubled construction group Carillion PLC (LON:CLLN) will report its first half results on Wednesday, only weeks after a profit warning sent the share price into freefall.

Back in July, Carillion blamed “difficultR21; markets as it lowered full-year revenue guidance, suspended its dividend and waved goodbye to its chief executive.

WATCH: Carillion being dragged through a hedge fund backwards

Rather than trading conditions, it looks now like Carillion wasn’t particularly discerning in the contracts it took on over the past few years, something it’s paying for now.

In the midst of all that, Carillion launched a “comprehensive review of the business” so the markets will wait with baited breath to hear what that’s found so far.

There’s also been speculation that the Wolverhampton-based group will look to raise money soon – possibly upwards of £500mln – so keep an eye out for any news on that.

What do analysts expect to happen?

Earlier this month, UBS said it expected “significant dilution” shareholders as Carillion looks to shore up its balance sheet.

“We believe either (1) equity raise; (2) debt for equity or (3) asset disposals are all on the cards, or a combination of the three,” UBS said, repeating its ‘sell’ rating on the stock.

“However for shareholders and creditors, the question is now mainly: what is the value of the support services business and is it above the current debt like liabilities of £1.6bn (second half estimate)?”

Analysts at UBS think a more dramatic restructuring – potentially an exit from construction altogether – could be on the cards, although they agree with UBS that a cash call is more likely.

“In our view, the most likely course of action will be a rights issue, but we would not rule out a more dramatic restructuring (an exit from construction?), or potentially a combination of both.”

Is it now a takeover target?

Given that Carillion has lost more than three-quarters of its value in 2017, it’s obvious why several commentators think other companies might look to take it out on the cheap in the near future.

Unfortunately for investors hoping to claw back some of their losses – or even make some money – with a possible takeover offer, JP Morgan has some bad news.

“We are not convinced that Carillion would represent a feasible target for a potential acquirer, given the scale of risk and liabilities.

”

[excell1] 19/8/2017 21:16

Doom, Doom and one more time Doom. You have to laugh at some of the posts on this thread.I have read most of the doomster postings and now because of them have decided to sell all my stock in Carillion at 08.01 on Monday morning.LOL
What Lemons you all must be believing that your infantile doomster posts actually make any bloody difference.

[racg] 19/8/2017 21:10

Suspicious much? Grand total of 10 posts and an intense negativity to Clln.

[opodio] 19/8/2017 20:45

placing at deep discount imho

maybe 20p

[lyme regis1] 19/8/2017 19:54

Construction contracts have always been a risky venture. High borrowing, no growth. Why would any company in their right mind, other than for prestige, take over this mill stone.

[racg] 19/8/2017 14:04

And the award for most self congratulatory shill clique of 2017 goes to......

[topvest] 19/8/2017 11:51

Unlikely. The bull case would be some company offering to merge with them. That's the only way out of a nasty fundraise as far as I can see.

[russell250] 19/8/2017 11:07

Are results and update going to better than expected?

Will there be a bounce?

[topvest] 19/8/2017 10:41

Agreed, a good post. Contrary to many people's thoughts, people do post on ADVFN when they have a negative view on the stock, but have no position. I have never shorted any share and will not ever do so. This situation is likely to lead to a dilutive fundraise. I don't think that the company will fail, but any rights issue will involve a massive capital restructuring and 50P per share will likely be the highest equivalent share price that will be reached ever again.

[wllmherk] 19/8/2017 08:43

A sensible post Fenner and there are not many of them on here,

wllm

[fenners66] 18/8/2017 22:14

I have had Carillion on my watch list for a few years.

Sometimes I buy shares soon after , sometimes I wait for a better entry and some I don't buy at all but keep watching to see if that was a mistake (that I should have bought ) or whether it confirms I was right not to buy.

The market was warning about Carillion for years and more recently after last results published.

Everyone could have sold before the profit warning - or not bought.

I have maintained that interest on the back of the "details" as published by Carillion themselves.

Now we learn that the CEO has not left he is to be COO , really?

And that they have postponed the interims - not really a surprise I guess as I said above why should £850m be kitchen sink when they only had 2 months from a standing start to come up with that number - the next published accounts will tell.

So they now need more time before publishing....

I have repeated Carillion's own negative statements on here to correct the blatant rubbish posted in contradiction to what the company has told us.

I have speculated that as is the way with human nature the profit warnings generally come in 3's as people try to break bad news gently.

I have not given any opinion on where the share price goes from here. Neither have I shorted the shares.

Why do I do that?

Because I pick up lots of research both for and against investing in companies from the advfn boards , I can read, and read a set of accounts and I want to contribute to the debate where I am interested in what happens next.

[gkp heros] 18/8/2017 17:45

Looking at the daily volume since the news. Buys have outweighed the sells . Many are buying here for the rights issue. The shorters are going to get burnt, as soon as next week I can see this moving quickly north!!

[gkp heros] 18/8/2017 17:42

The brave will win here, I have taken a large position here and have the funds ready for my rights shares when they kick in. I wouldn't be surprised to see a takeover here before the rights issue kicks in. And my money is on Balfour!!