Share Name Share Symbol Market Type Share ISIN Share Description
Tclarke Plc LSE:CTO London Ordinary Share GB0002015021 ORD 10P
  Price Change % Change Share Price Shares Traded Last Trade
  7.80 7.84% 107.25 280,806 16:35:21
Bid Price Offer Price High Price Low Price Open Price
105.00 109.50 110.00 101.50 101.50
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Construction & Materials 334.60 9.00 18.37 5.8 46
Last Trade Time Trade Type Trade Size Trade Price Currency
14:50:54 O 1,370 105.53 GBX

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Tclarke Daily Update: Tclarke Plc is listed in the Construction & Materials sector of the London Stock Exchange with ticker CTO. The last closing price for Tclarke was 99.45p.
Tclarke Plc has a 4 week average price of 86.30p and a 12 week average price of 71p.
The 1 year high share price is 140p while the 1 year low share price is currently 71p.
There are currently 42,953,211 shares in issue and the average daily traded volume is 87,206 shares. The market capitalisation of Tclarke Plc is £46,067,318.80.
grahamburn: Gelp. Beg to differ, though that does depend on your definition of "small" and "big", I guess, as well as whether the dividend is "postponed" or "cancelled". Clarke's dividend has been a mainstay for many retail shareholders, including myself, especially as the share price growth has over the recent past been somewhat patchy. IMHO cash assets per se do not necessarily lead to an increase in the share price. Having said that, given the uncertain times we live in, I agree with the decision to retain cash within the business by postponing the dividend - and maybe even cancelling this particular dividend should the business require cash in the next few months. However, having been a shareholder (quite a "large" one in retail terms) for an extended period and knowing the company's activities well, unless spare cashflow can be put to a better use within the business, I believe the company should reinstate the dividend as soon as practicable. PS I don't recall you being a contributor to this board so would recommend you scroll back through this board as there has been a regular debate over the years on here about whether Clarke should actually increase its dividend!
gelp: Surely dividend postponement or cancel is not a bad thing , benefits all "smaller" share holder s as cash retained in business and boosts the cash assets and should reflect a bit in share price.Only big holders hurt but I guess they pleased when price rises any way!And justifiable prudent reasoning anyway.Still can't believe will stay sub 100 for long!
edmundshaw: 140-160p is my initial target. If the company continues to hold its position in the market as the number one in smart builing outfitting, who knows in the future? It is a growth share (at value share rating), but recent viral headwinds have taken their toll on the share price.
theoldcodger: I'm sorry to hear you're out of CTO CC2014, even if it's only temporarily. I agree with most of what you say, although when inflation inevitably rears its ugly head, I believe that equities will be just about the only game in town. I'm not selling my position though (I'm roughly breakeven at the current share price), I first bought shares in CTO over 30 years ago and although I've traded in and out many times since then (usually profitably), it's one of the few shares I feel comfortable holding in these uncertain times (although I think declaring a final dividend with their recent results was somewhat gung-ho). As you say, it's impossible to know how all this is going to pan out, but even though the market may well head significantly lower, I think CTO has all the requisites to exploit the undoubted opportunities that will arise when all this has blown over. I look forward to you buying in again at some point in the future as I've always appreciated your contributions to this board. Good luck with your strategy, TOC
cc2014: f25jcm. I had a very enjoyable day yesterday and remain confident about my position with T.Clarke. You ask a very broad question and I would recommend you find an opportunity to talk to the directors yourself, perhaps at the AGM or I'm sure they will be available at another event. Where to start. Well, you will already know the forecasts in the public domain which are for a 2021 P/E of below 7, a dividend yield of 3.9% and net cash by then higher than it's current value of £12.4m. This matched with the near record order book gives confidence this will be delivered. These forecasts were made before the Gooee investment, the uptick in construction PMI's and yesterday's HS2 announcement. So, P/E of less than 7 along with net cash looks cheap to me before we consider our new opportunities. So, what of Gooee. Strategic part first. All my own thoughts. T Clarke has been in business 130 years and during that time has done some memorabale projects, Olympics in 1948 and 2012 and the O2 to name a few. To stay the leader in your field you have to be the first (or nearly the first if you prefer) to innovate, because otherwise someone else will come and take away your lead and your market share. About 10 years ago T Clarke bought a Mechanical contractor and now many (most?) of their large projects are joing M&E. About 3 years ago T Clarke set up an offsite manufacturing facility About 18 months ago T Clarke bought Eton Now we have Gooee. Each time it gives T Clarke an added value propostion to their Clients, enables them to stay as the innovator in their field and take market share off others. Clients are prepared to pay extra for the most up to date installation, built to a better quality with a lower on-going running cost. So, it's my view we should perhaps view Gooee in the same way. It's going to enable a building manager to see exactly where they are using their resources (and who is using them) over time in one interface. It will know for example an air conditioning system isn't operating as efficiently as it used to and that action is required before it fails. It will also know where and the flow of people in the building and therefore to adjust heat and light. It's going to drive carbon reduction, leisure and working environments. It will enable building managers to put forward better evidenced business cases for investment in far less time than it does currently. One the one hand Gooee is an added value propostion to T. Clarke's existing client base, but it's also enabler to broaden the client base. It's not clear to me which is greater of these two, but to end on a rather flippant note, on a prospective P/E of less than 7 I don't need to think that deeply as the existing business looks "inexpesive" at a share price of 130p, and any additional sales/margin improvement from Gooee which could be very substantial seem to be "for free" Recommendation: Double up!
cc2014: I had an incredibly informative results call with the directors of nationwide building services contractor T Clarke (CTO:105p). The company ended the half year with a bumper £370m order book, having won around £130m worth of tenders since the end of 2018 and delivered 12 per cent higher revenues of £171m in the six month trading period. It’s increasingly profitable work, as highlighted by the uptick in operating margin from 2.6 per cent to 2.9 per cent, which helped drive the 24 per cent increase in first half underlying pre-tax profit and earnings per share (EPS) to £4.6m and 8.67p, respectively. Finance director Trevor Mitchell confirmed to me that 96 per cent of house broker N+1 Singer’s full-year revenue estimate of £340m is covered by the contracted order book, and half of the broker’s 2020 revenue forecast of £360m, too. Both Mr Mitchell and chief executive Mark Lawrence reiterated their confidence in hitting the broker’s numbers which point to full-year adjusted pre-tax profit and EPS rising by 16 per cent to £9.3m and 17.5p in 2019, respectively. They are also confident of achieving N+1 Singer’s 2020 pre-tax profit and EPS estimates of £9.9m and 18.6p. But TClarke’s share price fell by 12 per cent post the results as investors focused on news that some of the company’s London clients were holding back starting their new developments given UK political uncertainty. Also, some less well funded rivals in the London market are desperate for work which has created pricing pressure. TClarke clearly isn’t and the board were well ahead of the game to mitigate any impact in London as they have already expanded into Europe to take advantage of high margin data centre work. This has led to some significant opportunities: TClarke already has tenders out on two major European projects (contract values of £30m to £40m) which if successful will start in March 2020. The company also has an impressive bid pipeline across the whole of the UK. In fact, Mr Mitchell says the business has £1bn of tenders out with clients including work at Manchester Airport, and the new Channel4 studios in Leeds (TClarke won the tender on the London studio, so looks well placed). Moreover, the corporate presentation accompanying the interims results is absolutely jammed pack full of tenders which, based on an historic win rate of between one-in-three to one-in-four, indicates a sizeable opportunity for the company to exploit. The point being that investors’ misperception over TClarke’s trading prospects has created an investment opportunity for investors to exploit. That’s because there is actually a high probability that TClarke will generate cumulative EPS of 36p over the 2019 and 2020 financial years, in-line with analyst estimates. That sum equates to a third of the share price. Also, as seasonal working capital build eases in the second half then TClarke’s half year cash pile of £4.7m should double to about £10m by the year-end, a sum worth 23p a share. In other words, the shares are effectively being priced on a cash-adjusted current year price/earnings (PE) ratio of 4.7. There is a progressive dividend, t00. The board lifted the interim payout per share by 14 per cent to 0.75p, and N+1 Singer predicts a 10 per cent hike to 4.4p for the full-year, implying the shares offer a prospective dividend yield of 4.3 per cent. True, the shares have pulled back since I last advised buying, at 128p, in mid-May (‘TClarke reports a robust start to 2019 financial year’, 16 May 2019), albeit they are still well ahead of my 90p entry point last December and the company has since paid out its 2018 final dividend of 3.34p (‘Profit from a buoyant earnings cycle’, 7 December 2018). However, I strongly feel this is a buying opportunity given that the current miserly rating is completely at odds with the trading prospects of the company and the strong likelihood that the directors will hit their 2019 and 2020 internal budgets. Indeed, during our results call, Mr Mitchell told me that the business “is trading ahead of internal budgets for turnover”. That’s well worth noting as is the ability of TClarke to convert what is undoubtedly a bumper pipeline of work into firm orders. Offering 43 per cent upside to my maintained 150p target price, I feel that the shares are well worth buying. The flow of trades this morning suggests to me there is one large institution selling. Probably Miton selling out their final shares?
cc2014: I have been musing about this post for some time. Does anyone find the trade flow and price action a bit strange over the last couple of months? I've been investing and trading for very many years and the stock market has been very kind to me. After so many years I've got of got a sense for how share prices move and for when things look unusual. What I see here is that after a significant price correction, we continue to see a continuous flow of buys. Now the price correction was overdue (PER, net cash, assets etc. were all screaming this for some time) and as is usual price corrections do not go in straight lines and this one is not complete, but what I call the ebb and flow in the share price seems odd. I would have expected the pullbacks to be stronger, contain more volume and last longer, but that's not what's happening. It's like someone knows something and is not prepared to be patient as they know they are on a limited timeframe. Or there are multiple buyers all of whom know something and are having to compete for stock. In some ways I don't have to think about this much deeper as the P/E is still low compared with the sector average and in addition profits are rising at a sustainable impressive rate. Further the new stream of business within Eton provides a much better margin and opportunities for growth and the effects of that have yet to play out to any great extent. Maybe it's as simple as that and some fund managers see consistent long term growth with a low P/E and no debt. However, I keep looking at the trades and the buying pressure seems stronger than I would expect given the share price was 80p only 8 months ago. When the share price was 80p I was really worried someone would come along and make a bid at 120p which I felt would have been derisory but difficult for the Board to defend. Now any bid would have to be in the 200p area which I still wouldn't be happy with but at least is alot higher than 120p. I don't know, maybe I'm imagining things which aren't there in the trade flow and it is as simple as the shares remain "cheap" but it seems to be something more than that.
tuscan4: Thanks CC2014, Comparisons with early 2000's can be misleading. CTO was a pure electrical contractor in those days, throwing off surplus cash which went to augment its nationwide collection of small electrical contractors, all bought ad-hoc, with little strategic focus. With minimal pension fund commitments and little need for working capital they were very generous with the dividend. Hence the share price spike. Everything changed with the 2008 recession. Legacy contracts maintained profits for a few years,then margins were decimated. CTO changed its business model to survive, the fruits of which are now emerging. Margins are rebuilding but will not go back to earlier levels. The pension fund deficit will, I believe, fall away over the next few years. CTo is moving up the value chain and is building a moat to differentiate itself from the competition. CTO directors are rewarding themselves, possibly excessively , for the change in the company's market position. Shareholders received the bulk of the fruits of the earlier prosperity. Now the Directors are in pole position. To me this is a very vulnerable company to a private equity offer.
cc2014: Good morning all. I'm pleased to see the hard work of the directors is now beginning to be reflected in the share price. I found the update interesting. Headline " TCLARKE REPORTS SUSTAINED GROWTH IN ORDER BOOK AND PROFITABILITY AND IS DEBT FREE" And is debt free gets it's own sentence and is in bold at the top. Clearly the directors wish to point out the strength of the balance sheet. And rightly so. The construction sector has been hit with warning after warning over cash and many investors won't touch it any longer because of this. Carillion goes bust, IRV on it's last legs even after cash injection a year ago, Laing O'Rourke filing accounts late as they can't get them signed off until they have reached agreement with their banks, Galliford rights issue a year ago, Kier rights issue a few weeks ago. Any number of smaller competitors going bust. So, how many listed construction companies out there can claim to be debt free and have £12m in the bank? only two I think, CTO and NMNC (and go look at their share price over the last 3 years and see what it did for them). Rightly they should shout loud about this, to investors, clients and suppliers. It makes me sleep easy at night. And then this from the CEO: The Board continues to look forward with optimism and we remain focussed on delivering an improving financial performance as we move through the year." I grinned from ear to ear when I read this. What I believe it says is "things are going pretty well, we're almost sure we're going to upgrade the numbers later in the year but it would not be prudent to do so only one month into the year no matter how confident we are" I can't get my head round N+1. Where does that dividend forecast come from? Profits up 18.6% in the year, yet dividends only up 5.7%. What are they on? Did they not notice the interim was up 10% and by implication surely the final will be up at least 10%. And as for 3.9p in 2019. That makes no sense either. If £8.6m=14.7p EPS, then 16.3p=£9.5m. They forecast profits up 11% but dividends up only 5.4%. They are forecasting a company with £12m in the bank and no debt is going to only pay out 24% as dividends and as the profits get bigger they will pay out less and less and dividends on a proportional basis! If that's true, the dividend bill will be £1.6m, the corporation tax bill will be £1.6m and all other things be equal with working capital CTO will end 2019 with £18m in their bank account. Not that I would object to £18m in the bank account but I think it more likely N+! don't have a scooby and that's part of the reason the share price is so low. Anyways all good from where I'm sitting. I particularly like the progress on intelligent buildings with Eton. Got to be good for margins. Hurrah
cc2014: A few thoughts. N+1 the house broker suggest CTO should have a rating similar to their peer group. Now, I'm not entirely sure agree with this as CTO are more specialist, have more stable profits and considerably less debt and in my mind should be at a premium to the peer group. However, let's run with it. The peer group have a average P/E of 8.8 for 2019. That however, includes Interserve, so I'm going to strip them out (because 75% of their business isn't construction, they have loans totalling £800m+ and under any normal measure would be breaching their banking covenants). Therefore the sector average based on the top 7 excluding Interserve is a P/E of 10.47. Make of it what you will but with a forecast P/E for 2019 of 5.3, N+1 are suggesting the share price should be 50-100% higher. So, why isn't it? Some have suggested the Carillion affect. I reject this as this is in BBY, GRFD, KIE share price as well and we are only comparing on the basis of the peer groups P/E's It is my view that the share price is depressed due to MIFID II, which has meant some funds have been selling down their holdings in small caps on a significant scale. The scale has been dependent on their investment mandate and as a generalisation the shares have been soaked up by private investors. If you look across the spectrum of small caps, for some this process ended 9-12 months ago, for some it's still going on. In relation to CTO I perceive it is complete apart from Miton. Miton were selling down their holding aggressively until about 4 weeks ago. Since them we can't say anything apart from it's either stopped or it's slowed down to a treacle. I don't really care as I'm here for the long term. Miton have no more than 3.5m shares left or £3.2m. Even if Miton continue to sell they will get soaked up over time. Of course if this were VRS or TERN they would get soaked up in a day by PI's, but there again those sort of buyers aren't investors and would do nothing for the share price in the long term. The share price is now bashing it's head at 90 resistance on the chart. I guess it is inevitable it was going to stop there for a while until such time as those inclined to sell on the basis of a wiggly line have all done so. What's more interesting is what happens once the chart resistance high point is breached. In our case once the sellers at 90 have got exhausted, there is no chart point or other psychology to stop the price rising and in this case stocks tend to accelerate away at speed once the 90 psychological barrier is breached. Or put another way having waiting for all the sellers to sell at 90 why would you sell at 92 or 94 or 96. Psychologically even the most eager person ready to sell is going to be thinking about 100. You can read about this sort of trading psychology, in a book by the greatest trader of all time, Jesse Livermore.
Tclarke share price data is direct from the London Stock Exchange
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