Connect Share Discussion Threads

[wllmherk] 24/7/2017 07:34

What was the market expecting, a 1.3% decline in overall group revenue doesn't sound great but company say this is in line with expectations ?
Probably fall this morning but who knows, I gave up trying to gauge market reactions years ago.

wllm

[morgank] 24/7/2017 07:21

https://otp.tools.investis.com/clients/uk/smiths_news/rns/regulatory-story.aspx?cid=786&newsid=893955Steady as she goes, no major shock

[morgank] 23/7/2017 19:35

I'm in and ready

[edmundshaw] 21/7/2017 14:56

Last pre-update orders please! Form an orderly queue...

[morgank] 20/7/2017 10:18

Shore Capital raises CNCT to BUY from HOLD today

[skinny] 19/7/2017 13:15

Lets see what the 24th brings..

[danieldruff2] 19/7/2017 12:33

Looks to be recovering from a big dumping of shares at 100p last week

[edmundshaw] 14/7/2017 21:22

Kenny that is understandable. If there is a good update and a big markeup on open you will miss much of the initial upside, but still get decent value - and being a small company, you might get an early chance to get in cheap. If risk avoidance is the most important thing for you go for it.

[kenny] 14/7/2017 18:01

Thanks Aleman for taking the trouble. The position may not be as bad as my initial review suggested. However, I think it prudent to await the 24 July statement and review in light of what comes out.

[aleman] 14/7/2017 17:31

It gets a bit tricky without going into minute detail but 6% of interim operating profit (£1.7m) goes with the disposal. So free cashflow will be knocked back a bit but the items I mentioned won't repeat and the majority will still pass through.

Another way of looking at it is CNCT made £50m free cashflow last year after flattering £2m with working capital changes. The previous year it made £40m free cashflow after an £8m loss to working capital. So underlying freecashflow is maybe £48m. Education made £9m of EBITDA. Add in tax and interest and capex and how much cashflow has been lost - £6m? £5m? 10% or so of free cashflow lost roughly? Doesn't that still leave underlying freecashflow running at comfortably over £40m for a £23m dividend. I grant there is slow attrition to come on that but it still looks comfortable.

(I'm not sure but, with the Smiths pension being in surplus, there might be a slight gain in pension contribution with the disposal, as well?)

[kenny] 14/7/2017 16:09

What about the £4m of annual profits that disappear with the division that has been sold?

[aleman] 14/7/2017 14:16

Kenny - in future, capex won't run above depreciation by £5m, , there'sll be £1m less interest and there won't be £4m soaked up by workign capital each half. That's an extra £10m for the half year. Over a full-year that nearly covers the dividend on its own.

[dangersimpson2] 14/7/2017 13:13

Well the argument would be that management have been increasing the dividend payout including at the last set of interims where the dividend was uncovered by free cash flow (although it was by earnings.) They are unlikely to have done this unless they felt the new level was sustainable and one set of six month figures isn't enough to show otherwise.

Things could of course changed significantly for the worse since 25th April and the dividend may need to be cut in the future, but taking results from a 6-month period where the management chose to increase the dividend payout as your primary evidence for unsustainability would seem to be a weak argument to me.

[kenny] 14/7/2017 12:38

Could someone please explain to me how the current dividends are maintainable in the context of the following figures:

Free Cash Flow- latest interims annualised - £16.4m
Annual dividends - £22.7m

In the interims to 28.02.17 they increased borrowings by £16m, only £9.4m of which was used to buy fixed assets and intangibles.

[lord gnome] 14/7/2017 10:38

Yes, kazoom. One should never seek rationality or logic in the stock market. All will be revealed on 24th I dare say. Then we'll see if I was talking tosh or not.

[kazoom] 14/7/2017 08:24

"I seek a rational explanation" - ye see that's where you went wrong.

[lord gnome] 13/7/2017 17:50

kazoom - utter tosh? Maybe, but I seek a rational explanation for recent price action when perhaps there isn't one. I shall await news on 24th like everyone else. I just hope that it will be safe to back in the water.

[grahamg8] 13/7/2017 17:32

Got my latest buy just right at 91.375p; gloat, gloat. It's a pity that I'm still well underwater with hopeless timing on previous purchases. CNCT is one of my favourite income stocks. Good visibility on future earning due to long term contracts. The dividend is well covered dispute the H1 drop in profits. Overall a conservatively managed company that has delivered consistently over many years.

[aleman] 13/7/2017 17:00

The shares fell 2/3rds from 2007 to 2009 as companies with weak balance sheets were attacked yet the company kept churning out increased dividends. The market got it wrong. The yield hit 14% at the low point at the start of 2009. How much have they fallen this time? 60%+, allowing for a bit of dilution? The big fall does not necessarily mean bad news coming. It could be just poorly judged shorting again. The market is stupid at times, fortunately. It creates lots of opportunities. You can get wealthy taking advantage. Just beware that getting the odd dud comes with the territory.

[kazoom] 13/7/2017 16:58

When a theory like that is presented without even a mention that less than two weeks previously management said the exact opposite; it is (to be ultra-polite) an "unhelpful" statement.

No problem seeing a bit of speculation presented in context!

[fenners66] 13/7/2017 16:27

Its speculation yes , but not baseless.

I was in AHT when the share price suddenly took a dive fr, 240 to about 100. It started with insti selling as they had been sounded out for a rights issue to buy Nations Rent in the USA.

Share price had, had a good run up from 4p and we could not understand why it suddenly tanked - then it became apparent .

[kazoom] 13/7/2017 16:18

Meant no personal offence to anyone fenners, but baseless and misleading speculation does nobody any favours.

[morgank] 13/7/2017 16:00

1 million sell traded now the share price is rising

[fenners66] 13/7/2017 15:43

kazoom - no need for the "utter tosh " comment or have you not seen directors/companies change their minds before?

[retsius] 13/7/2017 15:22

Lord Gnome
Excellent news that you got a reply from the company,even better when you interpret the content.i.e.no change in Trading and no reason for precipitous drop.
Cnct always had negative equity but was always rated a 'buy' in the IC.
Tempted to dabble as short term punt on a rebound.
R.