Costain Share Discussion Threads

[someuwin] 14/5/2024 13:24

New project aims to revolutionise tunnel infrastructure installation with robotic AI



14 May 2024

A consortium of mechanical and civil engineering, and robotic automation industry leaders, including Tunnel Engineering Services (UK) Ltd (TES), i3D robotics (i3D), the Manufacturing Technology Centre (MTC), Costain, and VVB Engineering, has developed the first robotic and AI solution set to revolutionise the installation of mechanical and civil services in tunnels.

Traditionally, installing these services in tunnels is hazardous, labour-intensive and time-consuming. The prototype Automated Tunnel Robotic Installation System (ATRIS) can autonomously select brackets, locate where they need to be mounted along a tunnel wall, and install them. In doing so, the automated solution can improve on-site health and safety by reducing the risks associated with manual labour at the tunnel work face, for example, working at height in confined spaces, and hand-arm vibration experienced by workers during installation.

Once fully-developed, the final system can be deployed in tunnel construction for a variety of sectors including transport, water and energy. It is expected to increase productivity by 40% due to faster installation, reduce installation costs for new mechanical and electrical (M&E) systems by 30%, and cut construction plant movements by 40% to decrease embodied carbon.

The 22-month project, partly funded by Innovate UK’s Smart grant, was led by TES, which developed the initial concept in partnership with the consortium. Leveraging its expertise in robotics and automation, MTC spearheaded the design and manufacture of the robot's end effectors. i3D developed crucial visualisation software for precise navigation, whilst Costain and VVB provided industry knowledge and expertise in tunnelling and fit-out requirements.

Alan Worsley, Design and Project Manager at Tunnel Engineering Services (UK) Ltd said: “TES has over many years designed and manufactured Mechanised Tunnelling Machines and special purpose equipment for the construction industry. Over this time, innovation has been at the forefront of our business, and the need for automation in traditionally manual M&E fit-out techniques has led us to develop ATRIS and make it commercially viable for the market. We believe the system can offer a safer, more cost-effective and sustainable solution for future infrastructure projects.”

Steve Nesbitt, Chief Technologist for the Built Environment at MTC, said: “Like many sectors, construction has faced labour challenges over the past few years which has driven greater interest in using robots, beyond manufacturing and logistics, to address these issues. By contributing our expertise to this project, we are paving the way for construction companies to adopt technology for greater control and structuring of on-site works, making infrastructure delivery safer, more productive, and more sustainable.”

Dr Jon Storey, Lead Engineer at i3D, said: “Developing an automated system to install infrastructure in tunnels has been a long-standing ambition for the construction sector. ATRIS has moved us significantly closer to that goal. The use of stereo vision with machine learning and robotics to place bolts precisely on a curved surface is an unprecedented achievement, with potential applications beyond the construction sector, such as nuclear decommissioning and defence.”

Lee Bateson, Mechanical and Engineering Manager and Robotics Lead at Costain, said: “Teaching the robots to learn seemingly simple tasks – such as how to avoid cross-threading the screws that go into the sockets – has been hugely fulfilling, thanks to the consortium’s collaborative spirit. Whether it’s carbon reduction, increasing productivity or improving workforce health and safety, this is transformative technology that will have enormous benefits for the customers that we build tunnels for.”

Nicholas Beedle, Group Operations Director at VVB Engineering, said: “Tunnel works historically are expensive to build and maintain, and in the higher risk bracket for safety during construction and operation. It is important that ongoing improvements are made to address both of these issues. The development of the robotic AI solution is a step towards solving both of these industry challenges.”

hxxps://www.costain.com/news/news-releases/new-project-aims-to-revolutionise-tunnel-infrastructure-installation-with-robotic-ai/

[rimau1] 14/5/2024 09:44

Costain usually provide a brief trading update at the AGM so expect news Thursday. Suspect a quite vanilla started well, trading in line.

[xamf] 10/5/2024 23:27

I've taken advantage of the relatively weak share price today to top up on Costain. It is now my largest holding.

Kier has had a very good run of late relative to Costain and they now have the same low forward PE of 6.8. I love both stocks and hold both long term. However it's now time for Costain to motor on! It has a lower PEG (0.3 against 1.0) and of course sizeable net cash reserves. I note too that COST have their AGM this Thursday (16th May) and we'll get a trading update at some point.

[someuwin] 09/5/2024 19:48

Costain selected by Thames Water to upgrade key treatment sites

9 May 2024



* Upgrade to sewage treatment works will transform the lives of local communities in Sandhurst and Selborne.

Costain, the infrastructure solutions company, has been awarded a design and build contract with Thames Water to upgrade two strategic treatment assets in Sandhurst, Berkshire and Selborne, Hampshire.

The award, valued at more than £5m for the two sites, will see Costain support Thames Water’s upgrading of wastewater treatment assets as part of its Wastewater Asset Assurance Programme (WAAP). The schemes are the first that have been awarded to Costain as part of a wider investment programme for sewage treatment sites (STWs). This could see up to 25 similar projects allocated to Costain to create cost-efficient infrastructure solutions for Thames Water.

The planned construction will involve implementing flow monitoring technology to validate flow-to-full treatment for wastewater before it is discharged, upgrading the existing screening operations at the inlet station, improving storage tank capacity and revising the storm return pumping systems. The work will improve the ability of both sewage treatment works to treat the increasing volumes of incoming sewage, reducing the need for untreated discharges in wet weather. The schemes are due to complete in 2025.

Thames Water is currently undertaking its largest ever upgrade of sewers and STWs, with plans to improve more than 250 sites in the coming years as part of a £1.12bn investment in its wastewater sites.

Gerard Shore, water director at Costain, commented: “Thames Water is investing in river health and has a clear plan to upgrade hundreds of treatment plants across the region. This will have a transformative impact on the lives of residents and local communities. We know we can add considerable value by identifying further opportunities at the outline design stage to maximise efficiencies for the upgraded treatment infrastructure. This will help ensure that these assets are fit for purpose for the long term.”

Andrew Popple, director of delivery at Thames Water, added: “We have an excellent track record of working with Costain and we are looking forward to collaborating with them once again for this work.

We operate in a changing environment, with a population that is growing in many areas, so we continually monitor the potential need for upgrades at our STWs.”

The news follows Costain’s appointment by Northumbrian Water to its AMP8 strategic infrastructure framework that could see contracts with the potential value of £670m awarded to Costain over the 12-year period. In 2023, Costain extended into AMP8 its Managed Service Provider contract with United Utilities and its consultancy work with Yorkshire Water. Costain has also won funding from Ofwat to support innovation projects.

[hamhamham1] 09/5/2024 17:41

Depends if you think the share price is going to 180p area, as I do. £500m market cap is about right for here.

[this_is_me] 08/5/2024 19:55

buybacks in 2022 when the share price was around 40p would have been nice. They make less sense at over 80p.

[chris magpie] 08/5/2024 17:47

A smart acquisition is something Costain have repeatedly failed at for the past 50 years.
Maybe they will get one right eventually.

[eigthwonder] 08/5/2024 17:26

I think a sustainably higher annual dividend is the way forward - buy backs for a company this size reduce liquidity and you are paying people to leave your share register - not compatible with rewarding loyalty IMO. And one off special dividends give a short term sugar rush but achieve little long term.

[hamhamham1] 08/5/2024 15:46

Cash getting too high levels in the bank here. Need to announce say £30m of buybacks or make a smart acquisition.
Happy with either.
A special divi is a one off. Bit remove 10-15% of shares in issue then that gives better long term returns IMO.
They need to think about the long term shareholders who into this for a couple of quid.

[hamhamham1] 29/4/2024 19:09

Next update will no doubt say they have £200m+ in the bank.
Let's see what the market thinks of that then ;)

As I said before, I think this will hit £500m market cap at some point over next couple of years.

[roguemale1] 29/4/2024 13:05

Hopefully by that point we get news on the pension funding being all good and the divi can be upped or some other benefit...and that will hold momentum.

[thags] 29/4/2024 09:08

I think 94p then we get some selling

[dickbush] 29/4/2024 08:42

Next stop £1. Still only 8 times 2023's adjusted earnings.

[hamhamham1] 27/4/2024 19:21

It is at last getting recognised for its p&l and balance sheet.

[pinemartin9] 26/4/2024 22:38

What a week!

[roguemale1] 24/4/2024 14:06

Plenty of large "unknown" delayed trades yesterday and continuing today..mostly buys by the looks of the spread at the time.
Someone's accumulating.

[mirabeau] 23/4/2024 18:47

From IC April 8 2024 - Costain third in line as a potential takeover target -


IC 2024 Takeover Screen Stocks
Adjusted Reported
Company TIDM Industry Price (£) Market Cap (£mn) EV (£mn) EV/EBIT LTM EV/EBIT NTM Variance EV/EBIT LTM EV/EBIT NTM Variance
Jupiter Fund Management JUP Investment Trusts/Mutual Funds 0.87 455 100 1.0 1.5 46% 4.6 1.4 -69%
Rathbones RAT Investment Managers 15.38 1,601 234 1.7 1.3 -22% 3.6 1.2 -66%
Costain COST Engineering & Construction 0.77 213 77 1.9 1.7 -8% 2.5 1.8 -29%
Centrica CNA Gas Distributors 1.24 6,635 4,684 2.0 3.3 67% 1.2 3.2 154%
EnQuest ENQ Oil & Gas Production 0.15 292 972 2.3 2.6 15% 2.3 2.6 16%
Diversified Energy DEC Oil & Gas Production 10.03 474 1,501 2.8 3.8 33% - 5.3 -
Reach RCH Publishing: Newspapers 0.73 228 275 2.8 2.8 -1% 2.9 2.8 -4%
Bridgepoint BPT Investment Managers 2.48 1,971 441 2.9 2.1 -28% 3.5 2.0 -41%
Just JUST Life/Health Insurance 1.08 1,118 1,276 3.1 2.7 -11% 2.7 2.7 -1%
Kenmare Resources KMR Other Metals/Minerals 3.55 317 335 3.1 4.4 42% 3.0 4.7 57%
Pharos Energy PHAR Oil & Gas Production 0.22 91 94 3.2 3.2 -2% - 2.2 -
Secure Trust Bank STB Major Banks 6.66 125 269 3.2 2.6 -21% - 2.6 -
PayPoint PAY Regional Banks 4.78 347 240 3.4 3.1 -9% 3.8 3.1 -19%
Plus500 PLUS Investment Banks/Brokers 18.37 1,435 930 3.6 3.8 5% 3.6 3.9 9%
TP ICAP TCAP Investment Banks/Brokers 2.26 1,721 1,105 3.7 3.7 0% 6.7 3.7 -45%
Galliford Try GFRD Engineering & Construction 2.34 232 85 3.7 3.1 -17% 4.4 3.1 -31%
Smiths News SNWS Wholesale Distributors 0.48 115 145 3.8 3.8 1% 3.8 3.8 0%
On The Beach OTB Other Consumer Services 1.65 275 108 3.9 2.9 -26% 4.6 3.4 -24%
Drax DRX Electric Utilities 4.84 1,863 3,188 4.0 4.5 14% 3.9 4.6 16%
Schroders SDR Investment Managers 3.68 5,748 2,761 4.4 3.8 -13% 5.2 3.9 -24%
Liontrust Asset Management LIO Investment Managers 6.33 406 305 4.7 4.9 4% 25.4 5.0 -80%
Morgan Sindall MGNS Engineering & Construction 22.70 1,050 665 4.7 4.5 -4% 4.8 4.6 -4%
Bank of Georgia BGEO Major Banks 51.20 2,333 3,108 4.9 4.5 -8% - 4.5 -
Capital Limited CAPD Engineering & Construction 0.88 173 222 4.9 4.6 -7% 4.9 4.6 -6%
Kier KIE Engineering & Construction 1.25 527 713 5.0 4.6 -7% 6.4 4.6 -28%
Future FUTR Publishing: Books/Magazines 6.97 794 1,226 5.1 5.4 5% 7.8 5.3 -32%
Phoenix PHNX Life/Health Insurance 5.48 5,469 3,315 5.2

[mirabeau] 23/4/2024 18:44

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-plusR17; or target cost basis, meaning contractors no longer face the prospect of heavy losses on fixed-price, multi-year projects if materials or labour prices jump higher.

“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

[ttny2004] 23/4/2024 18:37

Agree. A few of us having being saying that for some time now. Tested our patience and finally being rewarded.

[sophia1982] 23/4/2024 17:26

In spite of the little rally, the stock still trades at 1.6 times EV/EBITDA. That is still immensely cheap.

[pinemartin9] 23/4/2024 15:57

Yeah, this is the explosive phase in the share price recovery. Well done all long term holders. And also, welcome aboard to all newbies in here.

[hamhamham1] 23/4/2024 15:29

Lovely rise today, 180p my target (£500m market cap)

[someuwin] 23/4/2024 15:01

This chart gives a better perpective of the recovery taking place here.

[someuwin] 23/4/2024 14:01

Water infrastructure alone is going to be a huge market for COST for years to come. Especially when Labour get in.

The recent Northumbrian Water contract awards alone are worth £670m over 12 years.

[mirabeau] 23/4/2024 13:56

I know something, interest rates are coming down this year and that should boost stocks even further