Chieftain Share Discussion Threads

[huttonr] 30/8/2006 11:36

It looks as if a few people are taking advantage of the price rise to cash in - but it seems to me that the price will rise a bit more yet.
I think that the 180 level looks about right - EPS should be about 12p for the full year (so P/E 15) with a dividend of say 6p (as Simso suggests) to give a yield of 3.3%. The profit to cash conversion of 732K profit to 1521K cash looks excellent, and the debtors/creditors look to be under control.
A few good press comments tomorrow and the price should rise again.

[simso] 30/8/2006 08:56

Yes, a bit of "something for everyone" here....

* Market Cap still below £12m, underpinned by £3.7m of cash. Enterprise value therefore only £8.3m.
* With House Broker forecasting 10.4p for the year, we have already delivered more than half of this in the "traditionally weaker" first half. Remember, the second half last year delivered £730k without the benefit of the new contracts!
* The House Broker had a Forecast Divi of 4p...but teh interim 2p suggests something much more exiting. A typical dividend policy of most businesses is to pay 1/3 of the divi at Interims, and 2/3 at Prelims...so perhaps we are heading for as much as 6p.
New contracts won...record order book.

Something for everyone...its still cheap on fundies, has strong growth, yield, robust balance sheet...what more could one want!

[davidosh] 30/8/2006 07:52

.....And most importantly the directors are confident of this continuing into the future as the order book has doubled .....

[veryniceperson] 30/8/2006 07:42

They are great results fez. This will reflect on the share price in the comming weeks. Divi up 60%, not bad!

[fez] 30/8/2006 07:19

A great set of results from Chieftain - totally expected if you've been watching the company and reading the boards - I'd expect this to rise considerably now the proof is out in these interims.

I can't remember a set of results where the phrase 'I am pleased' was as frequently used.... they're pleased - so am I...



Financial Highlights

• Turnover increased by 260% to £16.9 million (H1 2005: £4.7 million)
• Pre-tax profit of £732,000 (H1 2005: £1,000)
• Interim dividend up 60% at 2.0p (H1 2005: 1.25p)
• Significantly improved net cash position of £3.7 million (H1 2005: £1.2
million)


Operational Highlights

• All divisions performing well and contributing to profitability
• Further contract signed by Engineering Services operation on Teesside
• Manpower business underpinned by strong demand
• Current order book of £55 million (H1 2005: £25 million)


Commenting on the results, Chief Executive, Bill Taylor, said:

'I am pleased to report that the momentum built in 2005 has continued into the
first half of the current year with significant improvements in turnover and
profit before tax. Our order book has increased further to £55 million and all
sectors of our business are performing well and are contributing to the bottom
line'.

[davidosh] 25/8/2006 13:49

As the company made an operating loss in the first half last year and the interest on the cash in the bank was the only reason we made a £1000 overall profit on a turnover of £4.7m ....the interims this year will surely look sensationally good by direct comparison

I personally expect turnover to have tripled and then some......it is then a question of how much profit is booked at this stage and how much the long term contracts have reduced the overall margin.

The level of dividend payment will be a guide to confidence as they increased it last year even though the profits were clearly not coming through until the second half.

[veryniceperson] 24/8/2006 07:47

We should be getting the interim results next week. Maybe that is what all the little buys have been about. Thry were on the 2-9-05 last year. Hope they are good.

[simso] 14/8/2006 09:10

If anyone noticed, there is a small write up in this week's Investors Chronicle. Fairly brief..and obviously not researched by the IC boys in any detail at all, but ascribed a "Fairly Priced" view.

[simso] 25/7/2006 10:08

When the contracts were won, I talked to Stan Elliott the FD, and understod clearly from that conversation that the pricing basis for the contracts was in line with davidosh's understanding. On a weekly basis, the costs were calculated, and then two things were added to this...an apportionment of the fixed overhead, and a profit margin. In terms of cash, the money was in almost immediately after it was spent. While the profit margins will undoubtedly be quite low in terms of %, I would alse have thought the risks on making much less than Budget were relatively small.

[davidosh] 24/7/2006 15:07

As far as shareholders were made aware at the agm the contracts are fixed margin priced plus an allocation of additional cost against central overheads so I can understand that if less men are required then the savings will not filter through to CFT but the overall gain should still be fixed surely??

If the contract is being run more efficiently it may also mean they will get the contract for a longer period !!

[davidosh] 24/7/2006 14:38

Hi fivefive

Is there something you are basing this comment on or are you just presuming that margins will be tight there for some reason?

With the three new large maintenance contracts all on board the jump in turnover will be huge this year probably at least double to around £34m......surely the company would not have taken them on if a reasonable return was not possible.....Is there some feedback you have picked up?

[fivefive] 24/7/2006 14:07

I don't think the maintenance contract with Teesside power station will be as lucrative as RBC/CFT would like it to be

[davidosh] 24/7/2006 13:47

I doubt anything has changed at all with regards to the long order book and business as usual at CFT however a delayed sale of £15ks worth of shares at a terrible £1.05 plus a few small sales has clearly worried the MMs and the price has been heavily marked down ....I am trying to pick up 8k at a cheeky £1.08 as I write.

This is a fairly lightly traded stock and so these are days to be buying not selling unless you expect some adverse news ......I do not know of any problems and as there has not been any update since the half year close on 30th June I am sure the interims in early September will be at least in line with overall 2006 forecasts

AS the interims last year were exceptionally weak the comparatives are therefore going to look very good indeed .....and I personally expect the management to have guided this one well as far as expectation is concerned. If the interim results are as good therefore as many of us expect and with headline comparative that will be staggering I doubt this price will be available in just five weeks time so I personally took advantage of the Summer sales

[simso] 24/7/2006 11:53

Yes...I am just logging in from Majorca..seen the Cft price, and realised tghis hioliday has cost twice as much as intended! A big drop in such a good day for teh market. Any ideas, DaviDosh?

[madmix] 24/7/2006 11:35

Hi,

FWIW, Not directly related, but it seems that UBS has been busy downgrading expectations elsewhere in the engineering sector :


0601 GMT [Dow Jones] UBS downgrades Charter (CHTR.LN) to neutral from buy and reduces target to 770p from 970p. UBS believes the cycle peaks in 06-07, and says the risks to volumes and pricing that come with a potential slowdown in 07 limit the upside from current valuation levels. However UBS notes it has a strong balance sheet and is still well positioned to continue to outperform its engineering peers. Shares closed Friday at 717p.

Cheers,

Chris

[dpaccount] 24/7/2006 11:21

Any adverse news I've missed causing this large drop?

[huttonr] 13/7/2006 18:09

Query - Swan Hunter - the bit below is from the BBC news page today - is Swan Hunter one of the Chieftain contracts?

A troubled Tyneside ship building yard is to lose a contract to a rival yard in Scotland.
The Ministry of Defence (MoD), said it and Swan Hunter had agreed to close the contract, despite only one of the two ships commissioned being completed.

The ship, Lyme Bay, will now be transferred to BAE Systems at Govan.

The MoD said cost growth and delays led to the decision. It is not yet clear how the loss of the contract will impact on the 300-strong workforce.

[veryniceperson] 12/7/2006 10:16

Another little tick up again so far. Always makes me wonder with this share, no trades for days then lots of little ones come in. Could they be people in or around the company?

Just my thoughts on a lovely sunny day in my part of the world.

[davidosh] 03/7/2006 23:55

The board of directors have in the main been with the company for 20 years or thereabouts and have presided over a period especially in the north east of England where old established industry has generally been in decline....they have seen it all and know that business can be hard to win and far easier to lose.....profits have been lumpy over the past decade but the company has survived and is now looking very strong indeed.

From such a background I can certainly forgive the directors being generally cautious in their outlook until they have seen in real terms how these huge (for Chieftain) long term contracts have bedded in and worked through to the bottom line.

I attended the AGM in May and Bill Taylor the chief exec continually emphasised that he did not want to give any guidance to brokers or analysts until after the interims in September and insisted that the company was now in a very strong position compared to previous years due to the long term maintenance contracts .......his favourite comment to most shareholders when speaking to us individually appears to have been 'Have faith'

It is frustrating that the forecasts remain the same for this year as they were more or less from 2005 even though our company is clearly in a much better shape and in my opinion will increase turnover by nearly 150% this year. However I really do have faith and I suspect September and the interims will be our initial reward.....then further updates from the brokers

Another contract win in the Summer would be nice but my expectation that the company is capable of a pleasant surprise with eps of at least 12p and possibly 13p this year still holds .......that may not surprise those who have followed events here over the past year and a half but it will catch the market and that is the one that ultimately counts

Have faith .....and a little patience


David

[simso] 03/7/2006 07:21

It seems strange to me that the Brewin Forecast for this year has barely moved for about a year, despite the big contract wins. An optimist might start from a "base" of H2 last year, when £750k was made..and say a "Full Year Base" should be around £1.5m. Even that contains a conservatism factor as H2 last year would likely have contained some up-front costs relating to teh contract wins, without any Revenue benefit. The three big contracts could be worth, say £10m-£12m of Turnover. If one assumes a 3% bottom line profit from teh Contracts (Which I believe is standard for such contracts?), but after an absorbtion of teh Fixed Overhead..so that the true "Incremnental Contribution" is more like 7% to 8% by my Calcs..then we have another £1m on top. Taking us to£2.5m. I certainly see the chance for £2m+ profits, allowing fora conservatism factor. Anyone else share/disagree with this view?

[jeff h] 25/6/2006 14:55

Just noticed Brewins have a Forecast update:-

22/6/06 Buy Y/E 31/12/06 PtP £1.30 EPS 10.39p Div 4.00p

....and for Y/E 31/12/07 PtP £1.50 EPS 12.05p Div 4.50p

[penpont] 13/6/2006 14:11

Spoke too soon - divi just in.