Costain Share Discussion Threads

[catabrit] 10/5/2023 21:23

I didn’t think they were going to give trading updates outside of the half and yearly results.

[casholaa] 10/5/2023 19:52

Nothing much happens when there's an AGM. I'm not expecting anything.

[disc0dave45] 10/5/2023 19:19

Think there's an AGM trading update tomorrow.

[catabrit] 09/5/2023 11:56

I believe this is just part of the restructuring of the smart highways initiative that was announced by the government a few weeks' back

i.e. nothing unexpected.

[casholaa] 05/5/2023 12:45

Thank you for sharing.

[roguemale1] 05/5/2023 11:04

Following up on the rough AGM questions that I posted previously. IR replies as below.

1. Divi-will be reconsidered after conclusion of updated RCF and Pension review. Update at HY August
2. LTIP link to share price. There now is one, p112 report and accounts. There is a mechanism for 25% of LTIP based on TSR-Total shareholder return which is a metric including both Divi and Share price movement. Id prefer more than 25% but hey its better than I thought. (That is new for this year)
3. The factor that the current low price makes for more shares issued to Leadership team. This MAY be subject to a windfall clawback. Again I doubt it but it is there as an option presumably depending on how much noise the IIs make.

Divi has an effect on the TSR so i would expect a bit more interest in its reinstatement now.

[disc0dave45] 04/5/2023 23:43

Thanks for info post 2780The adj op profit margin 4.5% was for FY25 I believe, let's hope it does get re-rated but as you say given the improved fundamentals it should.That said Rev this FY could be lower than last year, circa £1.25bn, going on what they said in the finals, and don't recall a target margin but I'd guess a tad over 3%.

[pinemartin9] 04/5/2023 12:44

I keep on getting the downvote too! Not sure who it is tough. Could be an automated bot thing.

[catabrit] 04/5/2023 12:43

You are welcome. I am filtering Blackhorse as he keeps downvoting me (he's a premium member) and is clearly upset because I called him out on his ramping of Gattaca.

[casholaa] 04/5/2023 09:50

Thank you for sharing.

[catabrit] 04/5/2023 09:37

I am not worried about new buyers coming in. The path to a higher share price is very clear with all the major milestones / catalysts right there over a period of 6-36 months. Provided they execute, we're good.

I spoke to IR yesterday and it's worth stressing that the margin targets they've provided are all "self help" and don't rely on the kindness of strangers. The CFO has found lots of ways to boost margins via operational excellence / efficiencies and that's what has given them the confidence to flag them.

The run rate 'true' FCF after all costs including pensions is 20m per annum. That assumes zero margin expansion. So over a three year period we can expect to have a net 60m of cash on the b/s on top of the 130m that's already there today i.e. 190m, so more than current MC. So even assuming the current EV ratio stays flat over the next three years, you're looking at a minimum 12% compound return merely because of the cash build-up. And that's being super conservative.

But if those margin targets are hit and become visible in the numbers, we're going to see a big jump in FCF and that's going to cause the shares to re-rate meaningfully.

A 4.5% operating margin on flat revenue of 1.3bn is circa 60m of operating profit (which is mostly cash). Run the sensitives on that and it looks good.

6x = 360m (2.2x)
8x = 480m (2.9x)
10x = 600m (3.7x)

And that excludes the 190m of cash build-up on the b/s. I would expect that cash build-up to be less as they start paying out dividends but knowing how cautious the management team are, I wouldn't be modelling a big fat dividend anytime soon. I think they will start small and increase it every year until they have a sufficient cash amount on the b/s that they think is bullet proof.

[casholaa] 03/5/2023 18:27

I'm hoping that those 'smart motorways' double-up for us. If 'smart motorways' are not safe, it is in my mind inconceivable that any Government won't seek to avoid liability for fatalities and disasters, and so, we'll have to be paid again to undo what they paid us to do.

[pinemartin9] 03/5/2023 17:34

Good point. Also quite a few framework contracts that wouldn't be RNSd once delivery against them starts. Order book is strong here. I was mainly thinking about news flow that would attract in new buyers. There's clearly a lot of value here, and I'm not moaning about the 6 month return, however, we either wait for the sector to wake up or for new buyers to come onboard.

That said, all indicators look very bullish here. RSI 61, 10, 50, 200 day MAs all pointing upwards. Up on slightly declining 10 day/3 month volume average. Suggests to me that we are still seeing buying interest at these levels. Remember volume averages were skewed by some massive trading days in March. Happy holding and watching for a 2 year breakout soon.

[catabrit] 03/5/2023 16:58

Re contract wins - it’s worth remembering that Costain tend to work on the bigger contracts so it’s lumpier. Lack of RNS re contracts isn’t a concern.

[casholaa] 03/5/2023 16:03

I agree, it is a very nice chart :o)

[pinemartin9] 03/5/2023 15:59

Lovely looking 6 month chart here - the trend is your friend as they say. Looking good here. Just wish we could RNS a few contract wins.

[catabrit] 03/5/2023 12:05

Can we stop pumping other unrelated stocks on this thread? You run the risk of losing credibility and no amount of profit will offset that.

[blackhorse23] 03/5/2023 09:04

Out from here & going to buy GATC

[the_punted_mug] 29/4/2023 23:48

Come on Costain, you donkey.Picked up some right cheapies back in 2020 but could never flog them for less than 250m mcap.

[pinemartin9] 24/4/2023 19:38

Just the start here.

[hamhamham1] 24/4/2023 17:35

I already posted this but worth a re-read maybe.

[catabrit] 24/4/2023 17:31

As I said when a few others said sell post smart motorways news:

First level thinking - sell.
Second level thinking - wait, doesn’t this free up cash for other delayed schemes?

Yes, it looks like it does :)

Link below.

hxxps://www.newcivilengineer.com/latest/how-road-building-plans-could-change-with-1bn-smart-motorway-money-savings-18-04-2023

[owenski] 24/4/2023 17:19

Good move and on the back of higher recent volume.

[catabrit] 24/4/2023 16:53

You lost me at triangle. But whatever the technical jargon, it was lovely and long overdue. We have a long way to go folks.