Costain Share Discussion Threads

[purchaseatthetop] 14/4/2021 21:26

(I think it will go far higher than 75p but to say so might offend the Gods of Investing)
Can't be too careful.

[blackbear] 14/4/2021 21:20

One of the cheapest stocks around. 10 bagger is possible on a 3 year view.

[ttny2004] 14/4/2021 16:33

Hopefully, on it's way to test 68p resistance again, before breaking it and moving further north. My initial medium target is 150p plus. Very undervalued IMHO.

[purchaseatthetop] 14/4/2021 15:22

I like boring. I have exciting stocks like ITX, ENET, AGL, ARS, BMN but I also like more normal ones like NEX, SAGA, MCRO and I also like boring like COST. Maybe they will not set my portfolio alight but I know that in 18 months it will be around 75p and I do not have to worry about it.

[imastu pidgitaswell] 14/4/2021 15:14

From a month or so ago (found a different way to get the content for free...)

7% margins target - we'll see.





Costain is gearing up to grow again after dealing with problem contracts and tightening its risk assessment, according to chief executive Alex Vaughan.

The contractor lost almost £100m on three problems jobs last year, leading to a £96.1m hit for 2020. The cash impact of the loss-making contracts also dragged Costain’s revenue below £1bn for the first time since 2013.

Vaughan told Construction News this morning that the company has learnt its lessons and made changes. It has made a raft of new appointments in recent months, most significantly changing its chief financial officer, with Helen Willis replacing Tony Bickerstaff. Vaughan said Willis had carried out a full contract review since joining and closed out some problem jobs, in particular a Highways England job from 2016.

“When Helen joined, she did a deep review of every single contract,” Vaughan said. “We had one contract, that goes back to 2016, where there was a final account outstanding, and what we’ve done is just dealt with it and close that out.” Costain booked a £5m loss on the contract in its new results.

The review was part of the company’s attempt to clarify its risk position. “It’s all part of making sure the business is clear and well set moving forward,” Vaughan said.

New processes have been introduced to ensure the company is properly managing risks and delivering work profitably on current jobs. This has involved a monthly review of contracts and a new focus on how it is delivering work. “That’s already started to deliver increased margins,” Vaughan said.

Costain has also reduced its appetite for risk on new projects. “We’ve walked away from a number of contracts in the last 12 months where the risk profile of those contracts doesn’t suit what we believe the risk profile of our business should be,” he added.

Costain has largely avoided lump-sum contracts in recent years, the CEO said, but there were still issues with clients trying to transfer too much risk to contractors, which the company did not accept. He said: “We’ve got a set of commercial expectations as to the risk we believe we should take or could take, and if it doesn't meet that, then we'll decline the opportunity.”

After three years of falling revenue Costain’s annual turnover dropped below £1bn in 2020 to £978.4m. This was attributed to the cash impact from the problem projects along with less capital investment from clients. Costain’s water sector clients are moving from the AMP6 to AMP7 investment periods, but the pandemic also had an impact on new work starting.

Vaughan said that having dealt with its legacy contracts and the worst of the pandemic the company was ready to grow its revenue again. “At the end of December we already had over £1bn-worth of work secured for this year, so we will be back at well above £1bn in 2021,” he said.

The company has ambitions to grow further in the coming years. “Whilst we are focused on bottom-line profit and margin growth, we are also targeting top-line growth as well in the business,” he said. The company expects to benefit from the government’s stated desire to increase infrastructure spending.

Consulting is expected to be a growth area for the business, with Costain expanding its team in recent years. “We now have over 1,000 consultants every day charged out to delivering services to clients, so it is a growing part of our business,” he said.

Consulting activities are expected to account for around 40 per cent of Costain’s operating profit in 2021, and this may rise to 55 per cent in subsequent years. The more profitable consulting work will be crucial to Costain hitting its target margin of 6-7 per cent, Vaughan added.

[dexter1612] 14/4/2021 13:12

Agreed, ideal part of a balanced portfolio covering UK Value at a considerably discounted price.Boring but effective in a years time.

[pinemartin9] 14/4/2021 12:36

Yes, one to tuck away and forget about this. Could easily by 50% higher in 12 months. It's not crypto or NTFs but it's also relatively low risk I feel.

[dexter1612] 14/4/2021 12:03

Slow, steady progress. Like it.

[imastu pidgitaswell] 13/4/2021 08:37

I see the Chief Digital Officer (CDO? Head of Fingers?) left recently. Not sure if that is significant, his choice, or what.

What we need is a Costain insider on the thread...






Sold a few for 62, after buying recently at under 60. Just ticking it over while keeping a lot. Might as well as take something from the directionless movements.

[purchaseatthetop] 12/4/2021 14:34

Sorry about that....BTW what is going on with COST? I thought that it was doomed to be the only share in the red on my portfolio and now the damned dog has gone all BLUE!!!!

*confused face*

[wiganer] 12/4/2021 14:30

You had to Capita all off with a terrible pun, didn’t you.

[purchaseatthetop] 12/4/2021 13:14

Kier today, gone tomorrow

[pinemartin9] 12/4/2021 09:51

Costain thread

[sparty1] 12/4/2021 09:48

promises promises..I`ll be waiting with a few grand if it plummets..

[imastu pidgitaswell] 12/4/2021 09:08

And let's revisit that one next week, after Wednesday, eh?

After they have 'redefined' the debt...

[sparty1] 12/4/2021 08:43

"wallywoo12 Apr '21 - 07:09 - 20508 of 20510
0 1 0
Imastu, £63m of the debt expires in May (1 month!!!), over £50m more in November (not to mention the £80m HRMC debt which needs to be paid by June). I believe Kier won't be able to renegotiate it without looking at the total debt. So the crux time is now for debt.


Kier need to sell assets, and now otherwise they are in trouble, IMO. Guy Hands also knows this and will wait. I am surprised the share price has kept up for so long. It's a combination of a high market and Kier refusing to release any financial news (and this silly Sky news article, where for the 3rd time in 18 months they say a KL sale is any day).


All these factors will hit the share price soon. The market has to correct (it's back to the toppy levels before the pandemic).
imastu pidgitaswell12 Apr '21 - 08:13 - 20509 of 20510
0 1 0
Yes - I was really referring to the main facility. In theory they could repay the £63m by drawing down on the main facility, because they have 'only' drawn £503m against the £670m facility (in reality they can't - the lenders will require a coherent and feasible plan).

The key date is actually 12 months before July 2022, i.e. in 3 months, as that is when the debt gets reclassed from long term to short term with all of the associated reporting changes and impact on credit risks etc.

Which means that, of course, it's the reporting date a week on Wednesday that really matters..."

[imastu pidgitaswell] 12/4/2021 08:38

I don't think you realise that people on here have filtered you sparts.

You know, you might want to think about the content of that post - and maybe rethink again why you are attracted to KIE? But it's your choice.

[ammu12] 10/4/2021 07:48

Can't see on iPhone

[imastu pidgitaswell] 09/4/2021 15:54

Financial calendar in the header

[ammu12] 09/4/2021 15:37

When is the next trading update anyone ?

[wiganer] 09/4/2021 09:20

Added a few more today. Seems to have formed a base now.

[imastu pidgitaswell] 09/4/2021 07:52

Farrugia

Technically it’s not me saying it it’s them 🤓

But yes, as per the detail in the RNS, 32.4p (cumulative, the 3 years to 2023) gets them 100% of the award, 27.9p gets only 15%, and it all vests in 5 years from now. It's quite a narrow band and as I said broadly in line with those numbers in the header which add up to 31 and change.

As the previous post says, if they do that, that’ll do...(for me Tommy)

(I wasn’t a fan of Cannon and Ball...)