Costain Share Discussion Threads

[william7093] 30/7/2019 18:40

Could falling profits be anything to do with pushing women into higher positions and value being seen for employees rather than shareholders just a thought

[dickbush] 30/7/2019 15:14

An interesting tug of war between two institutions. Standard Life selling and Ennismore buying. By reputation, Keith Skeoch, now CEO, was a high class fund manager but he's probably far distant from making stock picks these days, and the holding in Costain would be immaterial to their funds. Ennismore have an excellent long term record but are not doing well this year. However, they specialise in small and mid-cap equities. The holding should be a lot more important to their performance. So, they should be giving a lot more time to analysis of Costain's future prospects. But, short term, Standard Life looks more determined to sell than Ennismore is to buy.

Half year results due out on 21st August. New broom will be having a clear out. My fingers are crossed that that doesn't include the divi. However, the triennial review of the pension fund was due on 31st March 2019. With yields on bonds down again since the last review, that isn't likely to make good reading.

Our economic masters seem happy with the idea of lower corporation tax rates and lower interest rates to stimulate growth while ignoring the greater damage to corporate cash flow from the ballooning of pension fund deficits through ever lower bond yields.

[rogerrail] 30/7/2019 11:36

HS3 cost estimate up to £39 billion. If COST JV gets 20-25% of that I would be very happy!

[buywell3] 30/7/2019 10:25

HS2North to HS2South

Starting with HS2Midlands manchester to Leeds (old HS3)

More Slower trains at 125 max stopping at more stations

A different animal costing less
Boris to make an announcement soon

[jimmywilson612] 27/7/2019 18:09

MR Boris looking to open up his wallet is good news for Costain you'd think

[dickbush] 15/7/2019 10:32

Keir Group down another 8% today to a new low. Industry being written off as a total dud. Good.

The UK economy, like most of Europe, is slowing to a halt. I think we should be getting an increase in public spending, including areas Costain works in. Will we? Who knows. Boris is talking about tax cuts.

It will be interesting to see how the new leaders of the EU react to near zero growth in many EU countries. There’s not much room for rate cuts, but can the Germans be persuaded to use Keynesian stimulus? It was anathema last time. Do they yet understand that their trade surpluses imply a responsibility to spend for the good of everyone else? Germany must be very close or even below the 60% government debt/GDP level required by Maastricht.

[dickbush] 15/7/2019 08:56

I started in the investment business working for a company whose investment management division was split between chartists and fundamentalists at a time when chartists were very highly regarded. What I saw over the next few years was that the chartists only made money from selling their services, not from their recommendations. One by one they lost their businesses. Fortunately, I was taught the business by a fundamentalist. To me, chartists are always searching for the last drop of performance to time their entry and exit. I'm only trying to buy cheap with no expectation that it will be the low.


FYI the share I made the most money on in this market had halved from its high in 2007 when I started buying and I was still buying when it halved again by the end of 2009. I then sold some numerous times when it rose strongly and bought them back when it went back down. Some six years after I started buying it,it was bid for and my average price including trading profits was below the low for 2009. I sell the strong and buy the weak. It works for me.

I do not expect to profit every time. I know how to lose money, too. Anyone who says they never lose is either a liar or very, very new to the investment business.


How do I think I could lose on COST? As I said a few days ago, the CEO's recent presentation was incredibly bullish. But, as I've seen many times, talk is cheap. That company I was talking about above made a similar capital markets day statement about what it was going to do over the next few years. If it had, it would have had to be taken over at twice the price.

[william7093] 12/7/2019 21:11

If costain does not get hs2 it will fall to 1 pound

[dickbush] 12/7/2019 19:02

TRCML, I think you have highlighted the main reason for getting involved in Costain. The major players in this industry have variously gone bust or, at least, got into financial trouble, with Keir being the latest example. They've shot themselves in the foot by competing too aggressively on price. Hopefully, the pressure on the competition will lead to a more profitable business for those left standing, but, even if true, we won't see the impact on the bottom line in the short term.

I can wait.

[jonwig] 12/7/2019 13:59

@ TRCML - I meant a recovery plan for the pension scheme. Sorry for being unclear.

Agree with your analysis.

[trcml] 12/7/2019 13:11

It's not really a recovery plan is it, more a plan for higher margin. It's not as though Costain is short of work. As I understand per the trading statement/ profit warning, only the M4 corridor project is cancelled; the other contracts are just delayed, the Preston distributor road following consultation between the council and motorists. The £10M arbitration loss is unfortunate but when the results come oit next month I wouldn't be surprised if the impact of profits will be lessened.

The pointlessness in competing for low-margin work seems to have sunk it at last. It was reported today (Construction Enquirer): "HS2 has cancelled the bid race for its flagship Curzon Street station project in Birmingham blaming a lack of interest from contractors. The move is the first signal that contractors’ appetite to take on high-risk major projects is waning after a wave of big write-downs across the sector. The rail client had hoped to shortlist at least four bidders for the £435m contract in May but said there had been a lack of interest from the industry in the call to prequalify." I interpret that as meaning contractors aren't interested in competing on margin.

[jonwig] 12/7/2019 11:44

The pension scheme deficit looks quite manageable: £4.2m vs £23.9m last time. And they have a recovery plan in place. They mention longevity as a positive factor, but I suspect interest rates will be more important: rising would help, but that's unlikely.

I suspect the share price is spooked by Kier Group, and I wonder as well whether huge contracts are the best way forward: so many moving parts, subcontractors, deliver length - all can go wrong.

Forward PER is about 6x, 3 brokers go strong buy, 2 go neutral. If I held, I'd stick, but aren't a buyer, as so much can go wrong in the wider scene.

[molatovkid] 12/7/2019 11:13

rns out....standard life buying

[rogerrail] 12/7/2019 08:16

no doubt many others like this :htTp://www.railtechnologymagazine.com/rail-news/plans-for-cardiffs-1bn-transport-network-unveiled

[molatovkid] 12/7/2019 08:12

If nothing else infrastructure projects are good political investments. Makes it look like the Govt is doing something constructive and it keeps people in jobs and whole industries going....

[rogerrail] 12/7/2019 08:10

Even if HS2 is cancelled there is likely to be significant spending by councils in the near future on public transport infrastructure much of it railways based.

[molatovkid] 12/7/2019 07:28

They just won a £150m contract....get a grip.

Building will not stop.

[propinv] 11/7/2019 22:35

Elsa. Lots of talk of many councils going bankrupt, having to cut back or even renege. I don't think these construction stocks nor real estate stocks are trading on fundamentals. If you read Martin Armstrong, we are in a liquidity crisis with funds pulling out of sectors etc that then feeding withdrawals, which lead to more sales. I think that's the issue.

[elsa7878] 11/7/2019 22:11

Don't know about the pension. From recollection there is no substantial deficit so not a huge drag and as you say if life expectancy is falling then they might end up being overfunded.
I keep looking for problems here and just can't find anything scary. The sector is out of favour and Kier is in big trouble but they have £450 million of debt. Amey is also on the block having just settled for £300 million with Birmingham CC. On the basis of last man standing and being well funded Costain and BB will be the only ones left.... Someone has to build the roads etc.

[propinv] 11/7/2019 21:45

Elsa. Tend to agree with your comments. Pension deficit will have opposite of perfect storm too. Life expectancy falling. Markets at all time high. That is a big win for pension who has a huge yearly contribution