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| Share Name | Share Symbol | Market | Stock Type |
|---|---|---|---|
| Costain Group Plc | COST | London | Ordinary Share |
| Price Change | Price Change % | Share Price | Last Trade
|
|
|---|---|---|---|---|
| 3.00 | 3.72% | 83.60 | 16:35:19 |
| Open Price | Low Price | High Price | Close Price | Previous Close |
|---|---|---|---|---|
| 82.60 | 81.20 | 84.60 | 83.60 | 80.60 |
| Industry Sector |
|---|
| CONSTRUCTION & MATERIALS |
| Announcement Date | Type | Currency | Dividend Amount | Ex Date | Record Date | Payment Date |
|---|---|---|---|---|---|---|
| 12/03/2024 | Final | GBP | 0.008 | 18/04/2024 | 19/04/2024 | 28/05/2024 |
| 05/09/2023 | Interim | GBP | 0.004 | 21/09/2023 | 22/09/2023 | 27/10/2023 |
| 06/03/2019 | Interim | GBP | 0.038 | 12/09/2019 | 13/09/2019 | 18/10/2019 |
| Top Posts |
|---|
Posted at 23/4/2024 18:44 by mirabeau Bullish IC article from Feb 2024 --- How Kier and Costain are thriving as rivals fail More construction companies went bust last year than in any other industry, but some shares are soaring - Lack of exposure to residential projects has helped - Both struggled during the pandemic but have shored up their balance sheets More construction companies went bust last year than in any other sector for the third year running, but most of the major listed contractors continue to thrive. Some 4,370 construction companies entered an insolvency process in the year ended November 2023, equating to 17 per cent of all UK corporate insolvencies, according to an analysis of Insolvency Service data by accountancy firm Mazars. “There are now on average a dozen building companies going under every single day in the UK,” said Mark Boughey, a restructuring services partner at the firm. Small and medium-sized contractors said workloads declined by 15 per cent last year and almost half reported a fall in new enquiries, the Federation of Master Builders said. However, contractors at the top end of the sector are flourishing, though, with most listed operators recording share price gains that comfortably outperformed the market. Kier’s (KIE) shares are up 82 per cent over the past 12 months. Shares in Costain (COST) are up 55 per cent, Galliford Try (GFRD) 47 per cent and Morgan Sindall (MGNS) 31 per cent. Only Balfour Beatty (BBY) has been a laggard, with its shares trading 8 per cent lower. Jefferies analysts highlighted investor concerns about a slowing US construction market and cancellations to future work from HS2 as factors for this. In general, listed contractors’ lack of exposure to the UK’s moribund residential new-build market has been a bonus. Output in private housing shrank by 19 per cent last year and is set to contract by a further 4 per cent this year, according to the Construction Products Association. Over the past decade, the likes of Kier, Costain and Balfour Beatty have switched their domestic focus much more towards delivering large infrastructure projects. The high-profile failure of Carillion in 2018 and Interserve a year later means this is a less crowded field and contract terms for this work are more industry-friendly. It is typically done on a ‘cost-plusR “You’ve got arguably less of the more ill-disciplined players left because the likes of Carillion have gone bust and the ones that remain are just managing that whole risk, contract appraisal and bidding process a lot better,” said Aynsley Lammin, an analyst at Investec. According to Balfour Beatty’s most recent annual report, only 10 per cent of UK construction work is carried out under a fixed-price contract, compared with 50 per cent in 2018. This isn’t a luxury afforded to smaller firms, and in many cases risk is “passed down the supply chain”, Boughey said, with tier two and tier three suppliers often tied into fixed-price contracts. “They don’t seem to have much bargaining power with the main contractors,” he said. Firm foundations The other major factor behind listed contractors’ rerating has been balance sheet strengthening. Kier had been in a precarious position even before the pandemic and undertook two rights issues between 2018-2021, raising over £500mn and offloading non-core businesses in a bid to stay afloat. Shareholders understandably took flight, and it’s taken a couple of years of significantly improved trading and debt reduction to tempt them back. Average month-end net debt fell from £582mn in 2021 to £232mn last year and last week the company announced plans to refinance its remaining debt through a £250mn bond issue. The five-year notes offered an interest rate of 9 per cent and attracted a BB+ rating from Fitch. The ratings agency said that 60 per cent of Kier’s contracts have pass-through clauses, allowing for costs to be recouped. Costain also had to complete a £100mn rights issue at the height of the pandemic in March 2020 at a time when its revenue and profits were plummeting. It has also had to rebuild trust – when we featured the company in our ideas section in September 2022 its shares were so lowly rated that the company was only valued at around half of its net assets. Even after their recent upgrade, they are valued at just six times forecasted earnings. Lammin said Costain has made “good progress” on improving profitability, with the company’s adjusted operating margin edging up to 2.3 per cent at the half-year and a roadmap in place to bump this up above 5 per cent. “If you believe in the sustainability of those structurally higher margins as they deliver them and a less risky balance sheet, then [Costain] looks very, very cheap,” he said. [But] they’ve got to convince the market the improvements they’re making are sustainable.” The government’s Infrastructure and Projects Authority (IPA) updated its project pipeline last week and acknowledged that a 40 per cent increase in construction prices since January 2020 meant project owners had been forced to “reset expected outputs to remain within approved budgets”. However, the IPA said there were still £164bn of investments planned by the end of the next fiscal year, adding that £700bn-£775bn of work needs to be done over the next decade. Whether all of this gets commissioned (or how quickly) will play a big part in listed contractors’ fortunes in the coming years. end |
Posted at 22/4/2024 08:17 by someuwin Share tip: Costain is building itself up againBuilder is leading the resurgence in the construction sector Lucy Tobin Sunday April 21 2024, 12.01am, The Sunday Times "The construction sector is picking itself up out of the rubble. Last year, more building companies went bust than in any other industry — a record 4,400 collapsing due to supply chain disruption, high material prices and labour shortages. The larger players stayed the course — most had improved their risk calculations after the liquidation of rival Carillion and Interserve’s rescue by its lenders. Now, more stable interest rates, easing inflation and more contract tendering are boosting construction’s appeal. The City has noticed, to an extent: Kier and Costain’s shares are 20 per cent higher than at the start of the year; Balfour Beatty and Galliford Try are up about 7 per cent. But they’re still a long way from their past peaks. Costain, for example, is now trading at 75p, less than half its pre-pandemic share price of 194p, while back in May 2019, its shares changed hands for £3. Since then, the firm, founded in Liverpool in 1865 has been punished for booking expensive charges for badly priced energy and road contracts, and diluted by a £100 million rights issue at the start of the pandemic, required to secure the balance sheet. But Costain is a vastly improved outfit from the housebuilder it was long ago. It has been transformed into an infrastructure contractor with tentacles in many a sector. It works with most of the major water suppliers on pollution-kerbing upgrades, with National Highways, Transport for London and National Rail, on the government’s contracts to decommission first-generation nuclear sites, and in defence. Costain looks poised to benefit from the UK’s likely Labour-led investment in more infrastructure projects. As Joe Brent, head of research at Liberum, explained: “We are optimistic about the outlook for infrastructure and believe Costain is the purest trade on this theme.” Last month, the firm posted a 10.5 per cent rise in adjusted operating profit to £40 million for 2023. This year, more than 80 per cent of its revenues have already been booked. Chief executive Alex Vaughan pointed out that the value of this is about three times last year’s earnings. This confidence helped Costain bring back its annual dividend. Its cashflow is smoother due to recent cost-cutting tinkering: for example, its pension fund contributions were dramatically slashed following a review last year. Net cash stands stronger at £164 million, from £124 million a year ago. The relatively small gap between those cash reserves and Costain’s £217 million market capitalisation hammers home its good value. Of course, the firm remains vulnerable to the ebbs and flows of contract-awarding mandarins, as has been seen with HS2. But analysts predict its pre-tax profit will exceed £52 million next year, and Costain’s shares are trading on just five times earnings for this year. It has a packed order book of blue-chip customers and has rebuilt its reputation: Buy Costain." |
Posted at 14/3/2024 17:52 by boystown A bit from Master Investor fwiw:Costain (LON:COST) – Better Margin Expected Growth This group shapes, creates and delivers pioneering solutions that transform the performance of the infrastructure ecosystem across the UK’s transport, energy, water, and defence markets. The year to end December reported revenues lower at £1.33bn (£1.42bn) while adjusted pre-tax profits were up at £44.2m (£34.2m), leaving basic earnings better at 12.2p (9.9p) and paying out an unchanged 1.2p dividend per share. Impressively the group ended its year with a net cash balance 32.8% higher at £164.4m (£123.8m). For the current year and going forward the group has a strong opportunities pipeline as well as having in excess of £1bn of revenue secured for 2024 at its year-end, representing more than 80% of expected revenue. CEO Alex Vaughan stated that: “The quality and balance of our forward work across our two divisions gives us good visibility on future revenue and margin. We have more than 80% of expected revenue secured for 2024 and our forward work stands at around three times 2023 revenue. We see continuing momentum in the business and remain confident in the Group’s growth prospects.” Analyst Andrew Nussey at Peel Hunt considers that the company is an undervalued stock in an undervalued sector, with its shares trading on just 5.6 times forecast earnings. Nussey reiterated his Buy recommendation while increasing his Price Objective from 80p to 95p. Over at Liberum Capital its analysts Joe Brent, Alex O’Hanlon and Sanjay Vidyarthi also rate the group’s shares as a Buy, looking for 100p in due course. They estimate that current year sales will be £1.22bn, with £46.5m pre-tax profits of £46.5m, generating 12.3p of earnings and covering 1.2p per share of dividend. For the group’s 2025 trading the analysts go for £1.22bn sales, £52.1m profits, earnings of 13.8p and a 1.4p dividend per share. The shares touched 72.45p on Tuesday in response to these results, before drifting back to an almost unchanged 66p. At that level the £190m capitalised group’s shares certainly are an undervalued stock, trading at 5.5 times current year price-to-earnings and just 4.9 times its 2025 hopes. |
Posted at 14/3/2024 14:28 by catabrit Stdyeddy - thank you. I try my best to be objective.Rougemale1 - my rant is about Costain pre and post Alex. In Alex’s defence he would point to zero contract issues (albeit the problems tend to be back ended so if there are provisions on contracts signed during his reign we won’t know for another few years). But if he was in charge of consulting and digital pre becoming CEO why have we gone from smart infra company to just infra? Why are we re-structuring digital? Does that mean he got the strategy wrong? And why are we not breaking out the consulting revenue and income line? I don’t care if it is bundled or hard to figure out - just do it. Don’t tell us - show us. Show us your revenue and income pie is safer / better than peers. Why should we investors do the hard work? If he wants his LTIP then he better break it out AND hit margins AND sort out the derisory capital return. Yes he’s handcuffed by the pension trustees and yes the wording has changed to allow him to return cash to shareholders if it’s in surplus but for God’s sake, bang the bloody drum as CEO. The Balfour CEO clearly articulated the value proposition in his shares during the presentation yesterday. He said here are our infrastructure investments, here’s our net cash and here’s our market cap. Oh and here’s all the cash we plan to generate over the next 5-yrs. Very simple math. Even IR should be breaking this out in their presentations. There should be an entire page in the deck about the market cap vs the net cash and the 30m of annual free cash flow they think they can generate I.e. we are aware of the past guys and we are sorry but here is the future and it is going to be rosy. Alex talks about the business and customers and mega trends and that’s great. It’s part of the job. But it’s only one part. The other is to be a steward of our capital and to send the tanks in when there is blood on the streets. I will likely sell my shares regardless if the buyback isn’t a very meaningful one as it shows he does not get it. Or I will go activist and put it up for a vote. We know they need at least 100m for banking purposes. Make that 120m. Does 160m in the bank vs 120m really move the needle order book wise? I doubt it. But a 30-40m buyback meaningfully moves the needle in terms of market cap. So divi at level of FTSE all share and buy back as much as the business will allow. If he refuses to do it, it either means he cannot because of business purposes which means the cash is a value trap or he does not get how capital allocation works. Nigelpm - I also bought in 2022 because of this and have done well as net cash has risen. But I believe that Costain spent a long time trading at net cash in the past. From 2010 to 2013 I believe. They only started to get a proper valuation on the core business from 2014 to 2018 when the order book was growing. I do think we will get there and we just need the actuarial surplus to be confirmed or not. And we probably need a few more years of zero contract issues. So I anticipate a good risk adjusted return from these levels but it might take longer than we all expect and I think that scepticism from the wider market is probably valid considering Costain’s prior promises and the general disdain towards contractors and contracting. Costain was openly telling shareholders that its target cost model was better than a fixed cost one (and 90 percent of its book was target cost as far back as 2013). Yet target cost can lead to issues if there is too much vagueness around scope and a high degree of complexity. So I think management need to be more open with us about what is in the order book and how they have dealt with target cost risk management and why they believe no major provisions will be forthcoming. Trust us is not enough considering the past. |
Posted at 12/1/2024 07:41 by mirabeau 23 AUg 2023Costain Group PLC (LSE:COST) is mulling restoring the dividend after a solid performance so far in 2023 and progress in boosting its financial position. In the six months to 30 June 2023, the construction and engineering firm reported flat revenue of £664.4 million, but a 20% jump in pre-tax profit to £15.9 million from £13.3 million the year before. The improved profit reflected robust growth in natural resources, resilience in transportation and continued positive cash generation. This has left Costain looking at restoring the interim dividend with an announcement expected “shortly” “The increase in operating performance and the positive outcomes regarding the pension review and refinancing, enables the board to consider the resumption of dividend payments, including the payment of an interim dividend in respect of the period to 30 June 2023,” the firm said. The transformation programme to create efficiencies is on track, with further benefits to come in the coming months and Costain expects the sectoral growth seen in natural resources together with the rephasing and rescoping of some infrastructure projects in rail and road to continue for the remainder of the year and into 2024. Expectations for the rest of the year remain unchanged, backed by more than 90% of revenue already being secured for the remainder of 2023. - 'Expectations for the rest of the year remain unchanged, backed by more than 90% of revenue already being secured for the remainder of 2023.'. It isn't going to take much to exceed expections on sales for 2023 All parameters pointing in the right direction with growth through improvemen to come |
Posted at 05/9/2023 10:04 by catabrit Agreed but the current dividend yield is only one piece of the pie, right? I mean if you’ve got 200m of EV resting on a 2% dividend yield with 1.2x cover and absolutely nothing else going for you then yeah, you are going to struggle. But that’s not what we have. We have an EV of 65m so a divi yield to equity of 5% and a FCF yield of like 30%. And if management are to be believed and you follow the earnings / accounting / math, then both of those figures are going to grow significantly.The next catalysts are technical (clearing 61p) and operational (margins). So on the last point, we agree. If it was all about dividend yields everyone would have piled into $IEP or Steppe Cement and yeah, look how those have fared YTD… As I said previously, two of the biggest gainers YTD (Rolls Royce and M&S) don’t pay a dividend. In an environment where you can get close to 5-6% on your money in the bank, that defies logic until you get into the weeds and see that the market is forward looking and bidding those up based on improving fundamentals and starting valuation vs those fundamentals. The same is happening here. |
Posted at 05/9/2023 09:23 by catabrit What nonsense. The high single digit yields of Aviva, Legal and General, Phoenix, M&G, the house builders and multiple others were not enough to stop their share prices declining this year. Why? Because a). Since when did dividend yield = valuation? B). It’s the coverage ratio / sustainability of that dividend that matters c). The market looks forward, not backwards.Nobody is buying Costain at 60p for the dividend yield. You’re buying it for the capital growth, safety considering the net cash and progressive dividend yield which will very likely net close to 10% in the years to come and still with ample cover vs FCF. |
Posted at 05/9/2023 07:04 by hamhamham1 5 September 2023Resumption of Dividends and Interim Dividend Declared Further to the announcement of half year results on 23 August 2023, Costain Group PLC ("Costain") announces that it will resume dividend payments and has declared an interim dividend of 0.4p per ordinary share for the six months ended 30 June 2023. The interim dividend payment will be made on 27 October 2023 to shareholders on the register at the close of business on 22 September 2023. Payment of the interim dividend will be both as a cash dividend and scrip dividend alternative. Shareholders wishing to join the scrip dividend scheme should return a completed mandate form to the Registrar, Equiniti, by 6 October 2023. The scrip reference price will be announced on 28 September 2023. For more information regarding the scrip and to download the mandate form, see Costain scrip. |
Posted at 04/9/2023 13:22 by roguemale1 Divi/pensionsI have tabulated the history of this but it wont paste in here properly so will try and phrase my open question instead apologies. So when they were last paying dividends it was on basis of 2.5 cover. Now stated cover 3 times. Cost of divi used to be roughly av 15m over last 3 divi yrs. So now for 2023 with the numbers heading back to where they were then you could prob expect something like £12m as a cost of divi. But now of course we have the criteria of 3.3m to pension until 2027 and if they want to pay more than that in divis then they have to match it into the pension. Now the pension contributions were always separate and on top of the divi cost previously but how does that work now? Is the intent to limit divi to 3.3m? OR Is the intent to make the total of divi and pension contribution my 12m? OR Is the intent to make the divi 12m and pay the pension the same should numbers allow? (or somewhere in between) I assume they may shed some light on this if indeed they do announce the resumption of dividend. Feel free to tell me if I have missed the answer to my musings in reading the report.... |
Posted at 25/8/2023 14:57 by grahamburn Headline, first para, concluding 2 paras and final recommendation from Tempus in Times (plenty of known detail in between):Costain, the builders’ ugly duckling, may fly again There is nothing like the whiff of a dividend to set investors’ adrenaline pumping, even from, well, a mixed set of results. That is what the builder Costain delivered on Wednesday, and the package has been well received since. The shares jumped from 46½p on Tuesday — ahead of the official announcement — to nearly 53p at one stage yesterday. They are coming out of intensive care, where they have lain since the pandemic, so it may be time to examine the company anew. So there is plenty going on, and signs that the current management is getting to grips with the headaches that have plagued the group in recent years. However, the comparison with the near-rival Balfour Beatty is instructive: both are in HS2, but Balfour is valued by the stock market at ten times Costain, on revenues five times larger and much more widely spread, including to the US. Balfour has paid dividends through and since Covid. But this is a reverse beauty parade. It begins to look increasingly that Costain, the ugly duckling, has been shamefully neglected by the stock market, leaving the share price appearing anomalous and set for recovery. On the back of pre-tax profits rising from £40 million-or-so this year, they should get close to £50 million for 2025. At current levels, the shares are trading on less than four times earnings two years hence, while the dividend yield is set to rise to about 2.8 per cent. That p/e ratio must surely blossom. ADVICE Buy WHY Unjustifiably overlooked after a long period in the doldrums |
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